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Subsidy growth to be flat, easing way to deficit target

Dec 10 2012, 03:51 IST
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SummaryThe Centre’s subsidy burden during 2012-13 could turn out to be much less than what many thought, helping finance minister P Chidambaram in his plan to restrict the fiscal deficit to 5.3% of the gross domestic product.

in subsidies, he could achieve significant savings in the remaining part of the year in Plan capital expenditure where the growth in the first seven months has been about 34% as against the budgeted 27%.

So Chidambaram could try and restrict the fiscal deficit to around Rs 5.4 lakh crore, as against the budgeted Rs 5.14 lakh crore. That means the deficit in the final five months should be restricted to Rs 1.7 lakh crore. That is a tough task but not an impossible one. The slowdown in GDP growth will have an adverse effect on the fiscal deficit when expressed as percentage of the GDP. Yet, a figure of 5.3-5.4% doesn't seem to be beyond reach.

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