Vote on Account: FM pegs fiscal deficit at 4.6% of GDP

Fiscal deficit is likely to be contained at 4.6 percent of the GDP, said finance minister P Chidambaram while presenting the interim budget on Monday. (Watch full speech here)

He has set the fiscal deficit, the gap between expenditure and revenue target, at 4.1 percent in FY15.

“Let me begin with the good news. Fiscal deficit for 2013-14 will be contained at 4.6 percent of GDP, well below the red line that I had drawn last year,” he said.

He said the current account deficit for FY14 will be contained at USD 45 billion, on the back of clamp down on gold imports. This is versus the shocking USD 88.2 billion that was announced last.

The FM said the revenue deficit for FY15 is seen at 3.3 percent and has pegged it at 3 percent in FY15.

The finance minister said the country has added USD 15 billion forex reserves during the period. He, however, said that food inflation continues to remain the main challenge.

P chidmabaram has time and again insisted on the fact that he won’t cross the red line of 4.8 percent of GDP. He has expected to stay within the line.

The fiscal deficit in FY13 came in at 4.9 percent of GDP against the estimated 5.3 percent.

As per current indications, the fiscal deficit has come down mainly on account of expenditure compression and higher realisation from the 2G spectrum auction. Chidambaram had cut expenditure by Rs 90,000 crore in the last 4 months of FY13.

After talking over as Finance Minister in August 2012, Chidambaram had drawn up a financial consolidation roadmap to lower the fiscal deficit to 4.8 percent of GDP in 2013-14, 4.2 percent in 2014-15 and 3.6 percent in 2015-16.