Eco Survey: Expect fiscal consolidation in mid-term
The fiscal outcome in the first nine months of the current financial year remained broadly on the consolidation track charted by the Budget, says the Economic Survey presented by the Union Finance Minister, Shri Pranab Mukherjee in the Parliament.
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Eco Survey: Expect fiscal consolidation in mid-term
The fiscal outcome in the first nine months of the current financial year remained broadly on the consolidation track charted by the Budget, says the Economic Survey presented by the Union Finance Minister, Shri Pranab Mukherjee in the Parliament.
Like this story, share it with millions of investors on M3
Eco Survey: Expect fiscal consolidation in mid-term
The fiscal outcome in the first nine months of the current financial year remained broadly on the consolidation track charted by the Budget, says the Economic Survey presented by the Union Finance Minister, Shri Pranab Mukherjee in the Parliament.
The fiscal outcome in the first nine months of the current financial year remained broadly on the consolidation track charted by the Budget, says the Economic Survey presented by the Union Finance Minister, Pranab Mukherjee in the Parliament. With growth reverting to pre-crisis levels in the current fiscal, revenues remaining buoyant and a much higher than budgeted realization in non-tax revenues arising from telecom 3G/BWA auctions, there was headroom for higher levels of expenditure at the given fiscal deficit targets.
Growth in gross tax revenue in the nine months of the current fiscal was 26.8%(year-on-year) as against a level of 17.9% envisaged for the fiscal by the Budget Estimates. Non-tax revenues grew by 136.4% in the first nine months of current fiscal as against a level of growth of 23.7% in the corresponding period last year in the first nine months and 32% envisaged by the budget estimates (BE). Revenue receipts grew by 50%.
In major taxes, the following were the year-on-year growth rates as against (envisaged by the BE) : customs 65.8% (36.1%); Central Excise 36.5% (29.4 %) ; Service tax 19.7% (17.2%); Corporate income tax 20.4% (18.1%) and personal income tax 13.1% (-3.6%). The deficit indicators are expected to remain on the targeted levels even with a pickup in expenditure in the next three months.
According to the Survey, year-on-year growth in total expenditure in the first nine months of the current fiscal was 11.2% as against 18.5% in 2009-10 (April-December) and 8.5% envisaged for the full year 2010-11 (BE). In the first nine months of the 2010-11 (April-December), while Plan expenditure grew by 18.9%, the non-plan expenditure grew by 7.9% as compared to 23% and 16.6% respectively for the same period last year. As per CGA, 84.7 per cent of the gross market borrowings were completed by the end of December 2010.
As per the advance estimates, the nominal GDP for 2010-11 placed at Rs.78,77,947 crore which represent a year-on-year growth on 20.3% and was 7.8 percentage points higher than the envisaged. As a result the budgeted fiscal and revenue deficits are 4.8% (as against 6.8% for the 2009-10 BE) and 3.5% respectively as a proportion to the GDP for the current fiscal year.
The Survey says that with the roadmap laid out by the Government Debt Report, 2010 the prospects of fiscal consolidation in the medium term and beyond are bright. Thus it is critical to anchor expenditure reforms to realize the projected deficit levels. A beginning has already been made with the reforms announced in subsidies, some of which have already been implemented. Going forward, deepening the reform process would hold the key to sustaining the fiscal consolidation process.
