Fiscal consolidation to be theme of Union Budget '10: Religare

The government resorting to various means aimed at raising its revenues as "fiscal consolidation" is likely to be the dominating theme of Union Budget 2010, financial services firm Religare says.

India witnessed increasing fiscal deficit levels because of the extraordinary turn of events last fiscal year. Policymakers across the world, including India adopted various monetary stimuli accompanied by quantitative easing measures to ensure liquidity.

Fiscal measures like tax-cuts and one-time rebates along with propulsion in government expenditure resulted in India's improving economic health but also led to an increase in deficit levels.

"Reining in these deficit levels through fiscal consolidation thus stands high on the agenda of Union Budget 2010," Religare Capital Markets Chief Economist Jay Shankar said.

India's consolidated fiscal deficit is likely to cross 11.5 per cent of GDP.

Fiscal deficit for financial year 2010 has been pegged at 6.8 per cent of GDP - a 16-year high.

"Such high levels of fiscal deficit, in our opinion, find their origin in 2008-09 when government spending soared due to the sixth pay commission, higher subsidy burden due to spur in crude prices and the debt-waiver scheme. The stimulus measures only added to the deficit, but much later," Shankar added.

The Budget session would start from February 22 and the Union budget would be tabled on February 26.