Hope to meet deficit targets, says govt

The government today said it hoped to meet the fiscal and revenue deficit targets for the current financial year (2010-11) despite putting up an improved performance during the first quarter.

During the April-June period, the Centre managed to rein in its fiscal deficit at 10.5 per cent of the budgeted level of Rs 3,81,408 crore, as against the five-year moving average of 51.7 per cent. Similarly, the revenue deficit was estimated at 3.8 per cent of the Budget estimate, compared to the five-year moving average of 81.2 per cent.

The improvement, as the government admitted in the Statement on Quarterly Review of Trends in Receipts and Expenditure, was on account of the flow of resources from the sale of spectrum to third-generation (3G) mobile operators and broadband wireless access service providers. Through the auction process, the government managed to mop up over Rs 1 lakh crore.

While this was nearly Rs 70,000 crore more than the government’s estimates, it is likely that the government is expecting higher expenditure and as a result deficits would be around the budgeted levels. Already, the government has received parliamentary approval to spend an additional Rs 54,500 crore.

The government has budgeted for a fiscal deficit of 5.5 per cent of the gross domestic product, as against 6.7 per cent last year. Revenue deficit is budgeted at 4 per cent compared to the revised estimate of 5.3 per cent in 2009-10. In the Budget for 2010-11, the government had started the process of exiting the stimulus. “The exit strategy was, however, so calibrated that it would not affect the revival process and help the Indian economy to grow at estimated 8.5 per cent during 2010-11,” the report said.

The report, which was tabled in Parliament today, said that the Centre was trying to “right pace” plan expenditure to ensure that there is adequate availability of resources. “Sustained efforts are being made to have better cash management and expenditure moderation in non-priority areas so as to make adequate resources available from realised receipts for priority items,” the 31-page document said.

It said that steps towards right pacing were already visible in plan expenditure, which at Rs 88,060 crore during April-June was 23.6 per cent of the budgeted level of Rs 3,73,092 crore for the current financial year. Since the Fiscal Responsibility and Budget Management Act was put in place in 2004-05, it has only been once that the percentage has been better.