India's fiscal deficit exceeds budget estimates in 10 months

India's fiscal deficit continued to exceed the budget estimates in the first 10 months of the current fiscal, data showed Monday, at a time when the government has recovered ground somewhat by earning around Rs.28,000 crore from its disinvestments till date.

Latest data by the Controller General of Accounts shows that deficit during April-January was Rs.568,000 crore as against the annual budget estimate of Rs.531,000 crore, thereby reaching 107 percent of the estimate in the first 10 months compared to 98.2 percent during the corresponding period of the previous fiscal.

The deficit had already crossed 100 percent of the estimate in the first nine months during April-December, at Rs.532,000 crore.

In this connection, Finance Minister Arun Jaitley on Saturday extended the target deadline for controlling fiscal deficit to three percent, reasoning that insistence on a pre-set timetable to contain the deficit would harm growth prospects.

"I will complete the journey to a fiscal deficit of three percent in three years, rather than the two years envisaged previously," Jaitley told the Lok Sabha while presenting the NDA government's first full budget.

"Thus, for the next three years, my targets are 3.9 percent for 2015-16, 3.5 percent for 2016-17, and 3.0 percent for 2017-18," he said.

Jaitley has a headache in store in controlling the fiscal deficit because the tax revenue earned by the central government as a percentage of the GDP has been falling over the years.

Tax revenue in 2007-2008 stood at 11.9 percent of the GDP. By 2013-2014, it had fallen to 10 percent of GDP and in 2014-2015 it is expected to fall further to 9.6 percent, signifying the government's declining ability to service its accumulated debt.

The fiscal deficit data came on the day when the government also published details of its historic monetary policy framework agreement with the Reserve Bank of India, whereby the central bank will aim to bring retail inflation below 6 percent by January 2016 - and to around four percent by fiscal 2016-17.