Slightly harder work for govt on fiscal deficit

The Union government might have to work slightly more than anticipated to meet its stated aim of containing its fiscal deficit at the estimated 4.8 per cent of gross domestic product. The GDP size estimate was on Friday revised slightly downwards, by about Rs 50,000 crore from the Budget assumption.

The economy was assumed to grow to Rs 1,13,71,886 crore in 2013-14. The advance estimates peg it at Rs 1,13,20,463 crore. The fiscal deficit was precisely estimated at 4.77 per cent of GDP in the Budget.

The new estimate of the full-year deficit is now Rs 532,061 crore. As of December-end, this had reached Rs 516,390 crore. On the Budget's assumption, the government presumed it could afford to overspend Rs 26,109 crore over its receipts in the remaining three months of the financial year (till March 31) to meet the fiscal deficit target. Now, the overspending will have to be contained at Rs 15,671 crore.

Till November 2013, the deficit was Rs 5.09 lakh crore. So, in a month more, the overspending rose only Rs 7,000 crore. If this is maintained for the next three months, the government could have met the target easily. The new data issued on Friday make it a bit more difficult.

December gets advance tax payments; the next instalments of these will come only in March. So, January and February might have a larger overspend than December. However, larger than expected receipts from the telecom spectrum auction might rescue the finance ministry.

Besides, the government might cut plan expenditure. Last year, it made heavy cuts in these, to rein the fiscal deficit at 4.9 per cent of GDP, much lower than the 5.1 per cent pegged in the Budget and 5.2 per cent in the revised estimates.

Besides, it might have to roll over subsidies to the next year.