Fiscal deficit breaches annual target in Jan

The government’s fiscal deficit target for the current year has been breached in January, and with the numbers for the two months still to come, the gap between expenditure and revenue may widen further.

At the end of the 10 months ending January, the fiscal deficit was Rs 4,34,933 crore or 105.4 per cent of the target, the Controller General of Accounts (CGA) said. The government had pegged the fiscal deficit for 2011-12 at 4.6 per cent of the Gross Domestic Product (GDP) or Rs 412,817 crore. The fiscal deficit was 58.3 per cent of the budget estimates at the end of ten months during 2010-11.

The rise in fiscal deficit is mainly on account of high subsidy bill, increasing crude oil prices, low tax collection and poor realisation from sale of government equity in state-owned companies. However, the likely Rs 12,500 crore earning from tomorrow’s stake sale in oil-major ONGC could bring some relief for the government.

Besides, the lower economic growth could further deteriorate the fiscal situation as deficit is measured as a percentage of Gross Domestic Product (GDP). The economic growth during the current fiscal is expected to be 6.9 per cent as against the original estimate of about 9 per cent.

Finance Minister Pranab Mukherjee in his budget for 2012-13 to be presented on March 16 is expected to announce steps to contain the fiscal deficit.

As per the CGA data, tax collection during April-January 2011-12 was Rs 458,567 crore or 69.5 per cent of the Budget Estimates (BE).