Fiscal deficit likely at 5.5%

Fiscal deficit likely at 5.5%
Hindustan Times, February 2, 2010, Page 23

The fiscal deficit for 2010-11 is likely to be pegged at 5.5 per cent of gross domestic product (GDP) as macroeconomic managers struggle to bring down government borrowings.

The fiscal deficit as a percentage of GDP is projected at 6.8 per cent this year.

The government had announced a series of measures, including tax breaks in many products, but many of these measures have left gaping hole in public finances, forcing the government to borrow a record Rs 4.51 lakh core.

“The deficit is expected to come down by 1.5 per cent every year amounting to about Rs 90,000 crore. This is a realistic target as expenditure pertaining to areas like the sixth pay commission implementation would be a one-time outflow,” an official, who did not wish to be identified, said.

While government expenses is set to cross Rs 11 lakh crore for the year mirroring the need for high public spending to spur growth, the government is banking on greater revenue buoyancy, on the back of a fast recovery in the broader economy, to rein in the fiscal deficit.

The economy has recovered faster than the government had anticipated.