Fiscal deficit won’t exceed 6.8% target: Montek

Fiscal deficit won’t exceed 6.8% target: Montek
The Economic Times, August 25, 2009, Page 6

Our Bureau NEW DELHI

THE Planning Commission has said that the fiscal deficit, the difference between revenue earned by the government and expenditure made, will not exceed the budgetary estimate of 6.8% of gross domestic product (a measure of total economic output of a country).

Planning Commission deputy chairman Montek Singh Ahluwalia said on Monday that there is no “reason to think that 6.8% (fiscal deficit target) will be crossed” even though there is falling revenue and rising expenditure to combat the impact of drought as well as global meltdown. Noting that the deficit is dependent on many factors, he said: “Whatever happens ... one (additional expenditure) can get offset by (savings on) other items. As of now we are not changing the estimate (of 6.8% fiscal deficit).”

Finance Minister Pranab Mukherjee, in the Budget for 2009-10, pegged the fiscal deficit target at 6.8% of the GDP, up from 6.2% in the previous fiscal.

Meanwhile, Prime Minister Manmohan Singh has called the first meeting of the newly constituted Planning Commission on September 1. The meeting, which will be attended by finance minister Pranab Mukherjee, agriculture minister Sharad Pawar and other Cabinet ministers, will discuss the state of the economy and review implementation of the integrated energy policy.

The government had decided to borrow Rs 4.5 lakh crore from the market during the current fiscal, up from Rs 3.1 lakh crore in 2008-09. A higher fiscal deficit would mean that the government will have to borrow more from banks at the cost of industry and other borrowers.