Deficit spend to increase Rs 32,120 cr in FY '13

FM rules out further borrowing from market

The government will spend an additional Rs 32,120 crore in the current fiscal to help maintain its revised fiscal deficit target at 5.3 per cent, which Finance Minister P Chidambaram insists will not be revised upward further.

The approval of the Lok Sabha to spend the amount was sought through the first batch of Supplementary Demands for Grants for the fiscal 2012-13.

Chidambaram, however, said that there will be no extra borrowing from the market to meet the government’s revenue shortfall in the fiscal, much to the cheer of the private sector players.

The Centre had budgeted Rs 5.7 lakh crore as its borrowing target for 2012-13, of which it has already borrowed Rs 3.7 lakh crore till September 30.

Typically, the Centre accesses the market in the first half of every fiscal and the second half is devoted to the private borrowers. That is also the time when the state governments get into the market.

Market participants, however, took the finance minister’s words with a pinch of salt. They said the current revenue position indicates that the fiscal deficit is going to stay above Centre’s target of 5.3 per cent as revenue collection through disinvestment and spectrum sale has not been up to the mark and the time now onwards is too little to meet the set target.

Fiscal deficit during the April-October period rose to Rs 3.68 lakh crore or 71.6 per cent of the budgeted target.

Regarding the Supplementary Demands for Grants, the government said over Rs 28,000 crore of the total Rs 32,120 crore will go towards oil subsidy and Rs 2,000 crore will be provided to Air India to meet its turnaround plan.

Chidambaram had earlier expressed hopes that the fiscal deficit target for 2012-13 will not be revised upward. The government is expected to present the economic review for the July-September quarter in Parliament next week, in which the full year economic growth target is expected to revised downward.