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Sinha pegs fiscal deficit at 4.7 per cent

Union Finance Minister Yashwant Sinha has set a target for fiscal deficit of 4.7 per cent of gross domestic product (GDP) for 2001-02. In absolute terms, the fiscal deficit for the next financial year is pegged at Rs 1163.14 billion.

"I would have managed a lesser fiscal deficit but that would have come only at the cost of growth, which is not affordable," Sinha stated in his budget speech.

Sinha's fiscal deficit target of 4.7 per cent of GDP is in line with the Fiscal Responsibility Bill introduced in the Parliament in December 2000. The FR Act calls for bringing down the fiscal deficit to 2 per cent of GDP by 2006 and wiping out the revenue deficit in the next five years.

While Sinha has projected a total revenue mop-up of Rs 1630.31 billion for 2001-02, the total expenditure is estimated at Rs 3752.23 billion. The plan expenditure is Rs 1001 billion and the non-plan is Rs 2751.23 billion. He attributed the increase in non-plan expenditure to interest payments, defence and grants to state governments.

For the current fiscal i.e. 2000-01, the finance minister has met the fiscal deficit target of 5.1 per cent of GDP. Sinha had announced in his last budget that the fiscal deficit would be Rs 1112.75 billion of 5.1 per cent of GDP. He has also achieved the revenue deficit target of 3.6 per cent of GDP.

The revised estimate of total expenditure for the current fiscal i.e. 2000-01 is marginally lower by Rs 29.65 billion as compared to the budget estimate of Rs 3384.87 billion.

Tax receipts for 2000-01 as per the revised estimate stood at Rs 1444.03 billion representing a shortfall of Rs 18.06 billion compared to the budget estimate of Rs 1462.09 billion. Sinha mainly attributed this to lower collection in customs and excise duties.

The non-tax revenues, as per the revised estimates stood at Rs 617.63 billion, which is higher by Rs 42.99 billion as compared to the budget estimates of Rs 574.67 billion. The government's divestment receipts for the current fiscal have however been scaled down by Rs 75 billion to Rs 25 billion compared to the budget estimates of Rs 100 billion.

Presenting his proposals for the next fiscal, Sinha said that he was deeply conscious of the burden on the future generation. He added that the government did not allow the growth of non-plan expenditure.

He also said that the Centre would work jointly with all states to initiate further reforms at the state-level. He allocated Rs 42.34 billion toward the incentive fund for the next fiscal. The corpus of the incentive fund has been fixed at Rs 106.71 billion over the next five years.

Source: Business Standard

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