Govt working on ways to contain expenditure

Efforts are on to bridge CAD: FM

Govt working on ways to contain expenditure

The government is working out on ways to maximise its revenues and contain expenditure so as to keep the fiscal deficit under check, at a time when economic growth projections for the current fiscal have been lowered to sub-6 per cent, making it imminently difficult to stick to the target.

“The details will be worked out. Overtime, we will see various measures that need to be taken, are put in place,” the government’s Chief Economic Advisor Raguram Rajan said.

He was replying to a question on how the government is planning to restrict the fiscal deficit target to 5.3 per cent when the economic growth projections has been lowered to 5.7 per cent from the budgeted 7.5 per cent.

The government had budgeted a fiscal deficit target of 5.1 per cent for the whole year at a time when the gross domestic product (GDP) was expected to grow at 7.5 per cent and revenue collection was expected to be buoyant.

But, over the past seven months since April, a higher outgo on subsidies, particularly oil and food, lower rate of growth in tax revenues and poor offtake of disinvestment programme has adding to the fiscal woes of the Centre.

During the April-September period, gross direct tax collection rose by 5.9 per cent, as against the target of 15 per cent. Indirect tax collections grew at 15.6 per cent, against the annual target of 27 per cent.

Further, with nearly seven months of the fiscal about to get over, the government is yet to start its disinvestment programme, through which it aims to raise Rs 30,000 crore in 2012-13.

At this juncture, economists feel, it will be utterly difficult for the government to meet its revenue generation target set for this fiscal. Officials in the Finance Ministry have also expressed apprehensions about meeting the fiscal deficit target.

Rajan, however, said that there has been some thought behind the latest projections made by the Finance Ministry. He did not elaborate on the measures the government is contemplating in the coming few months to contain India’s twin deficits, which also includes the gaping Current Account Deficit.

Earlier in the day, Finance Minister P Chidambaram said that serious efforts would also be made to bridge the current account deficit (CAD) estimated at $70.3 billion by encouraging flow of FDI and FII.

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