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Galloping revenue expenditure cause for high fiscal deficit: study

The phenomenal increase in revenue expediture from a mere Rs 735.16 billion in 1990-91 to a whopping Rs 2.369 trillion in 1999-2000 is the major cause for the high fiscal deficit amounting to Rs 799.55 billion, according to a comprehensive study conducted by the Institute of Parlimentary Affairs in Bangalore.

The study revealed that despite a moderate growth of the revenue collection from Rs 549.54 billion in 1990-91 to Rs 1.283 trillion in 1999-2000, the increase in fiscal deficit this year was Rs 353.05 billion.

The revenue expenditure, which was at Rs 735.16 billion had outstripped the revenue growth during the decade and stood at Rs 2.369 billion, recording an increase of Rs 1.634 trillion during the decade.

Some of the major causes for the rapid growth in revenue expenditure were increase in the unavoidable defence expediture, debt service, high increase in salaries of government employees and ministers, expediture by the government, the natural calamities besides the last year's Kargil war, the study added.

The fiscal deficit will cross the five per cent mark of the Gross Domestic Product and might touch eight to nine per cent for the current year, the study claimed.

Cautioning against such increase in the fiscal deficit, the study said a strong political will, public support and non-partisan approach on the part of the politicians were needed to check the growth of fiscal deficit.

Speeding up of the divestment programme, enhancing the royalties and rents on government properties, a ten per cent minimum return on all government investments besides checking the growth of black money were some of the measures suggested by the study.

UNI

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