‘The govt faces a Herculean task and we must all wish it the best’

There is still very little by way of actual evidence that the government will be successful in bringing the burgeoning fiscal deficit on the path for achieving the FRBM targets as suggested by the Kelkar Committee. It is clear that investor will wait for real improvements in the fiscal situation to assure himself that the government’s action matches its words.

On fiscal deficit

Ground realities do not auger well for achieving the revised target of 5.3 per cent of the GDP. The latest fiscal deficit estimates released by the government for October-end would suggest huge amount of caution in raising expectations on this front. In the seven months (April to October) estimated revenue deficit is already 81.4 per cent of the Budget Estimate compared to 79.1 per cent a year ago. While the fiscal deficit is 71.6 per cent of the Budget Estimate as compared to the 74.4 per cent last year, it is still much above the five year moving average of 56.6 per cent. Clearly, the fiscal situation is way out of whack and would require some exceptional measures to bring it back in control. Revenue receipts are lower in the seven months at 43.2 per cent

... contd.