The government is likely to consider imposing further cuts on spending later in the year if tax revenues fall short, in order to meet the fiscal deficit target.
“We will review the situation around January by when the revised estimates for 2014-15 will be finalised. Also, there will be a more realistic estimate of revenue receipts by then. As of now, the fiscal situation seems under control,” said two officials familiar with the development.
The finance ministry had last month re-imposed an austerity drive and called for a 10 per cent cut in non-plan spending, including a ban on five star hotels and first class travel as it grapples to keep the fiscal deficit under check.
In the first half of 2014-15, the Centre’s fiscal deficit shot up to 82.6 per cent of its full year target. Data on the fiscal deficit till October 31 will be released on Friday.
The ministry is already working out Revised Estimates for expenditure for the current fiscal for each ministry and department. “There would be some cuts in allocation in the Budget for ministries based on the exercise,” said the first official.
Finance minister Arun Jaitley has till now maintained that the fiscal deficit target of 4.1 per cent of the GDP in 2014-15 is daunting but will be achieved. The minister had last month said that higher tax refunds were putting pressure on the fiscal deficit.
“Right now the data we have is for just six to seven months of the fiscal. Traditionally, tax revenues tend to pour in towards the end of the financial year but collections have been low this year,” said one of the officials, adding that non-tax revenue from planned stake sales in ONGC, Coal India and SAIL should help meet the target.