Fiscal deficit likely to be put at 4.9 %; Budget 2012-13

Posted By: Religare
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Fiscal deficit likely to be put at 4.9 %; Budget 2012-13
The finance minister is likely to peg the fiscal deficit at around 4.9 per cent of the GDP in budget 2012-13, according to officials in the ministry of Finance. The ministry had pegged the budget deficit for the current financial year at 4.6 per cent.

This target is now unlikely to be achieved and the actual deficit may be as high as 5.6 per cent of the Gross Domestic Product (GDP).

It will be interesting to see on what basis the government expects to maintain a fiscal deficit of 4.6 per cent for the coming financial year.

Fiscal deficit is the difference between revenues and expenditures of the government. The finance ministry has already lost its credibility on this front as it now looks certain to miss its target for the current year by a wide margin.

The government is likely to put its eggs in the disinvestment basket once again. However the slow pace of disinvestment in PSUs this year raises questions on how the government will expedite this process in the coming financial year. Against its disinvestment target of 40,000 crore for the year the government has till now managed to raise only Rs 1145 crore.

The slowdown in economic growth also limits the revenues from tax collections. The subsidy bill of the populist schemes of UPA is likely to go up considerably.

The 13th financial commission had sought fiscal deficit of 4.2 per cent for 2012-13. This target is now in the realm of impossibility. No wonder then that Finance Minister Pranab Mukherjee is going around saying that he is losing his sleep over fiscal deficit.

Read more about: fiscal deficit, gdp, government
Story first published: Tuesday, February 14, 2012, 23:31 [IST]
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