Fiscal deficit narrowed to 4.47% of GDP in FY14

Sceptics might call it a window dressing, but former Finance Minister P Chidambaram handed down a relatively low fiscal deficit to the new government. The deficit was reined in at a six-year bottom of 4.47 per cent of GDP (gross domestic product) in 2013-14, thanks to a squeeze in plan expenditure and improvement in tax collections towards the end of the year, official data showed on Friday. The fiscal deficit was pegged at 4.6 per cent of GDP in the Revised Estimates (RE) and 4.8 per cent in the Budget Estimates (BE).

The deficit had stood at 4.9 per cent in 2012-13.

In terms of absolute amount, the deficit was projected at Rs 5.24 lakh crore in RE for 2013-14, but it came down to Rs 5.08 lakh crore. This meant it was controlled at 96.9 per cent of RE. Last financial year, the improvement was a bit better, as fiscal deficit ultimately turned out to be 94.1 per cent of GDP.

The target was achieved, even as in the month of March, the government was to ensure fiscal surplus of Rs 75,000 crore to meet the goal. This was so because the deficit had stood at Rs 5.99 lakh crore till February. From that point, the deficit was reduced by Rs 91,000 crore.

To gauge how difficult the target was for March, one can compare the figure of such surplus at Rs 17,469 crore in March, 2013.

This happened as Rs 1.89 lakh crore of taxes were collected in the month of March only. Even then, the revenue fell short of 2.4 per cent at Rs 8.16 lakh crore in the entire 2013-14 against Rs 8.36 lakh crore pegged at RE. Shortfall was anyway expected since the economy was going through rough time and grew just 4.7 per cent in FY14, the second year of sub-five per cent growth.

Besides, plan expenditure was cut by 4.7 per cent at Rs 4.53 lakh crore in the year against already truncated Rs 4.75 lakh crore projected in RE. Last year, too, plan expenditure had saved the government.