Finance Minister Pranab Mukherjee on Tuesday stuck to Budget targets of reining in fiscal deficit at 4.6 per cent of GDP during 2011-12, despite the gap between government expenditure and income widening to one-third of the target in just two months.
The finance minister’s optimism also came despite duty cuts in the wake of elevated global crude prices would also result in loss of revenues for the exchequer.
“I don’t think so because we are still trying to keep the target,” Mukherjee told reporters in response to a query as to whether the reduced excise and customs duties on petroleum products would disturb the fiscal deficit target.
He, however, said the fiscal deficit numbers would ultimately depend on final analysis based on revenue receipt and expenditure. “But just now we need not rush to any conclusion,” he added.
The government had slashed the duties on petro products while raising the prices of diesel, kerosene and cooking gas last month.
The reduced duties will cost the central government an annual Rs 49,000 crore. But the burden this year would be around Rs 35,000 crore as the rate cuts took effect only after the first quarter ended.
The government had earlier expressed concern over the dip in revenue collections from both direct and indirect taxes due to volatility in global commodity prices and constant high inflation.
Notably, the central government’s fiscal deficit shot up to Rs 1.30 lakh, constituting 30 per cent of Budget targets.
The 28 per cent decline in tax revenues year-on-year resulted in the sharp rise in deficit. Moreover, the non-tax receipts in the first two months reduced to less than half compared to the collections in the same period last year.
The collections were Rs 5,613 crore in April-May 2011 against Rs 12,761 crore in the corresponding period of the previous year.