Borrowing, deficit targets may remain same

Will the market borrowing numbers and fiscal deficit estimates in the interim budget for the next financial year remain unchanged in the full budget, even if the regime changes after the general elections?

There is widespread perception that these may not, but going by past record, it very well could.

In the past, interim and full budgets have had the same fiscal deficit and borrowing targets for the year.

For instance, in 2004-05, when the UPA government succeeded the NDA, borrowing and fiscal deficit targets remained unchanged. The gross market borrowing in the budget for 2004-05 was projected at Rs 1.25 lakh crore, the same as estimated in the interim budget.

The fiscal deficit, which was estimated at 4.4 per cent of the gross domestic product (GDP) in the budget, was also left unchanged from the estimate in the interim budget.

Past examples

However, in 2009-10, when the Congress-led alliance retained power, the market borrowing and fiscal deficit targets in the interim budget were sharply scaled up in the full budget. The upward revision was necessitated by the fiscal stimulus announced by the government to revive the economy soon after the interim budget.

The gross market borrowing was initially at Rs 3.62 lakh crore for 2009-10, but was revised to Rs 4.51 lakh crore.

The fiscal deficit target was estimated at 5.5 per cent of the GDP, but later revised to 6.8 per cent.

In the interim budget in 1998-99, then Finance Minister Yashwant Sinha had changed the numbers, citing very high fiscal deficit.

Sinha had said he would take steps to bring the deficit down in the full budget. The NDA government had presented an interim budget in 1998-99, as it had assumed office barely a fortnight before the financial year ended.

Finance Minister P Chidambaram is due to present the interim budget for 2014-15 on Monday.

He is widely expected to meet the current year's fiscal deficit target of 4.8 per cent of the GDP and peg the 2014-15 deficit at around 4.2 per cent, in line with fiscal consolidation path laid down by the government.

The full budget will be presented by the government that comes to power after general elections slated for April-May.