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 on Wednesday.
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. "It is known the fiscal deficit will exceed the target, not a surprise at all. Rather it could increase by one percentage point of the target, which is not a good sign at all," said Govinda Rao, Member of Prime Ministers Economic Advisory Council.
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 tomorrows 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). The mop-up during the same period last fiscal was 92 per cent of the BE.
Similarly, the non-tax revenue collection totalled only Rs 90,566 crore or 72.2 per cent of BE. It was 136.6 per cent of BE last fiscal. Against the total income of Rs 567,101 crore during April-January, the governments expenditure was Rs 10,02,034 crore. As per the CGA data, revenue deficit during the period was Rs 3,34,383 crore or 108 per cent of BE. During the same period last year, the revenue deficit was 56.3 per cent.