Even as finance minister Pranab Mukherjee is expected to come up with a new fiscal roadmap, the Centre?s fiscal deficit shot up to over a quarter of its full year target in the first two months of 2009-10, largely on account of a heavy expenditure bill and low revenues. The fiscal deficit rose to 27.3% of the Budget Estimate (BE) or Rs 90,758 crore till May this year. This however is much lower than the fiscal deficit of 54.9% of the BE in May 2008.
Similarly, revenue deficit too has risen to Rs 80,963 crore or 33.9% of the BE till May 2009, as compared to a much higher 122.7% of the full fisc target a year ago, as per official figures released on Tuesday.
A new fiscal roadmap is expected in the main Budget for 2009-10 on July 6 when analysts expect the deficit to be revised.?We should wait for the new Budget and its deficit targets, before coming to any conclusion,? said DK Joshi, principal economist, CRISIL. For 2009-10, the Centre?s fiscal deficit is estimated at 5.5% of the GDP or Rs 3,32,835 crore and revenue deficit is expected to amount to 4% of GDP, as per the Interim Budget.
A report by Fitch Ratings released on Tuesday expressed the same view and noted that ?the sustainability of India?s public finances is a major sovereign rating concern?. James McCormack, Head of Sovereign Ratings for Asia-Pac, Fitch, said?Fitch looks to the new government?s FY10 budget, which will be released in the coming weeks, and the report of the Thirteenth Finance Commission, which will be released at end October, for insight into the government?s immediate and longer term fiscal objectives.?
G Ramachandran, ICICI Bank, Head?Global Research Group said,?Budget is crucial. Everbody is looking at the revised FRBM, revenue targets and expenditure control. The government can?t cut down too much on fiscal deficit, given the populist promises and slowdown pressures. Sovereign ratings are a concern. All this means the government would be hard pressed to borrow.?
The Centre?s total spending till May, 2009 however has been quite controlled at Rs 1,23,167 crore. This amounts to a mere 12.9% of the BE as against the 14.6% of the target a year ago. Both the plan and non plan spending rose to 12.95 of the full fsic estimate. While plan expenditure amounted to Rs 36,925 crore, non plan expenditure stood at Rs 86,242 crore.
Revenue receipts till May this year however were lower than a year ago. Total revenue amounted to Rs 32,178 or 5.3% of the BE, which is a shade lesser than the Rs 36,030 crore a year ago. The Centre?s tax revenue grew to 5.3% of the BE to Rs 26,152 crore, while non tax receipts rose to Rs 6,026 crore.
Meanwhile till May this year, the Centre?s primary deficit rose to Rs 64,820 crore or 60.4% of the full year estimate.