Centre's fiscal deficit moderated a tad

For the first nine months of the current financial year, the central government’s fiscal deficit touched 78.8 per cent of the Budget Estimate for all of 2012-2013. A slight improvement, since the percentage in the first eight months was 80.4.

The deficit had touched 92.3 per cent of the budget estimate in the corresponding period of 2011-12. In that year, the deficit rose sharply to 5.67 per cent of GDP, compared to the budget estimate of 4.6 per cent.

As of this December 31, the Centre’s fiscal deficit was Rs 4.05 lakh crore against the Rs 5.13 lakh crore estimated in the budget for the all of 2012-13. For the year, the deficit estimate was pegged at 5.1 per cent of GDP when the budget was presented last year. Mid-way, the finance ministry revised it to 5.3 per cent of GDP.

 

The GDP data revision, issued on Thursday, peg its size (at current prices, inclusive of indirect taxes) for 2011-12 to Rs 89.74 lakh crore from the earlier estimate of Rs 88.55 lakh crore. This could make a higher fiscal deficit in absolute terms look a bit lower. However, GDP this financial year might not grow by 14 per cent in nominal terms, as had been pegged in the Budget.

The finance minister had said the deficit would be cut 0.6 per cent every year for the next five years. For FY14, it is to be budgeted at 4.8 per cent of GDP, to ultimately reduce to three per cent of GDP by 2016-17.