Call for tighter fiscal regime in 2008-09

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The Economic Survey 2007-08 has called for a tighter fiscal regime as it raises questions about meeting revenue deficit target under the Fiscal Reform and Budgetary Management in the next fiscal. It has also asked the government to undertake further reduction in fiscal deficit over the next five years.

While fiscal deficit would come down to 3% in 2008-09 as expected under the FRBMA, it has, however, said revenue deficit might not be eliminated by the end of the next fiscal.

“A lower fiscal deficit will result in a reduction in the real domestic long-term interest rate of the economy,” the Survey tabled in Parliament by finance minister P Chidambaram said. In the short term, lower fiscal deficit lead to a fall in supply of government securities and subsequently decline in interest rates in the domestic economy.