Indian Govt Fiscal Deficit Increases

The Economy of India's fiscal deficit for year 2008-09 has increased when compared to previous year, following statistics show the grim picture of economy which is in high deficit. It is to mention that i had already predicted the fiscal deficit to rise in one of my previous post.

The difference between total receipts and expenditure is Rs 1,76,510 crore up to November 2008 in the current financial year.

This year the government is spending more than originally budgeted on social sector, subsidies and infrastructure development.

Policy makers believe that the rising fiscal deficit is not a matter of concern. Suresh Tendulkar, Chairman ,Prime Minister's Economic Advisory Council said," Private investment activity is very low as of now.So there is no question of fiscal deficit crowding out private investment activity and fiscal deficit need not be looked at as a major concern."

Home minister P Chidambaram already indicated that the government may require one more year to eliminate revenue deficit and reduce fiscal deficit below 3% as required by the Fiscal Responsibility and Budgetary Management Act."This is not a year to worry about fiscal deficit," the minister said.

The revenue deficit continued to surpass estimates for the whole year by 256.2%. It stood at Rs 1,41,364 during April-November 2008 as against Rs 55,184 for the entire fiscal. It may be pointed that a substantial part of the government's spending takes place in the first half of the fiscal.

The center's revenue stood at Rs 3,14,974 crore during first eight months accounting for 52.2% of estimated figure for the entire year against 56.5% a year ago. Most of the revenue came from taxes at Rs 2,53,558 crore. Expenditure stood at Rs 4,94,124 crore, constituting 65.8% of what is pegged for the entire year , up from 60.5% in a year ago period. Much of the expenditure comes under the non-plan head at Rs 3,57,994 crore constituting 70.5% of estimated figure for the year. Plan expenditure stood at Rs 1,36,160 crore ,which represents 55.9% of Rs 2,43,386 crore budgeted for the year.