The Centre's fiscal deficit fell by 68 per cent to Rs 40,196 crore during the April-June period year-on-year, on increased revenue receipts from the auction of 3G spectrum.

The fiscal deficit, which represents excess government expenditure over its revenue, for the first quarter of the previous year was Rs 1,24,302 crore.

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The additional Rs 1,27,815 crore that the government collected this quarter, as compared to the year-ago period, comes mainly from non-tax revenue -- at Rs 1,15,816 crore.

Towards the end of the quarter, the government had collected a sum of over Rs 1.06 lakh crore through the sale of spectrum for both 3G and Broadband Wireless Access (BWA) against the budget target of Rs 35,000 crore.

The first quarter fiscal deficit represents a mere 10.5 per cent of the budget estimate of Rs 3,81,408 crore for 2010-11, whereas the deficit in the year-ago period accounted for 31 per cent of the year's estimate of Rs 4,00,996 crore.

Reining in fiscal deficit assumes importance as stimulus measures provided by the government since late 2008 had disturbed targets. Against the target of a mere 3 per cent mandated by a Central legislation, fiscal deficit more than doubled to over 6 per cent of the GDP during 2008-09. Last fiscal, it further rose to over 6.5 per cent.

With a partial rollback of stimulus, the government expects to bring down the fiscal deficit to 5.5 per cent of the GDP this financial year. Experts believe that the government can easily prune fiscal deficit to less than 5 per cent of the GDP because of the large sum it got through spectrum sale.

The larger-than-expected amount gained from spectrum auction also narrowed revenue deficit during the quarter ending June to Rs 10,577 crore, 3.8 per cent of the fiscal target of Rs 2,76,512 crore.

Last fiscal, the first quarter accounted for 38.1 per cent of the yearly estimate.

Revenue deficit is the gap between the government's current expenditure and receipts.

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