Fiscal deficit projected to decline to 5.3% of GDP

The government has, in the Union Budget for 2002-03, projected a marginal decline in fiscal deficit to 5.3 per cent of the GDP from 5.7 per cent in 2001-02, mainly on account of containment of non-plan expenditure and a sharp increase projected in revenue receipts.

While the non-plan expenditure is projected to increase nearly 12 per cent at Rs 4.10 trillion, the revenue receipts are expected to be higher by over 15 per cent at 2.45 trillion from Rs 2.12 trillion during 2001-02.

Overall, the Budget 2002-03 proposes a revenue gain of about Rs 67 billion in the year on account of a hike in excise duty while loss on account of reduction in customs duty is expected to cost the exchequer around Rs 22 billion.

The proposals also envisage a buoyancy in the indirect tax revenue which is estimated to lead to a revenue collection of the order of Rs 1.43 trillion.

In monetary terms the fiscal deficit in 2002-03 would increase by close to three per cent at Rs 1.35 trillion from Rs 1.31 trillion the revised estimated for 2001-02.

Given the government's emphasis on supporting public investment to reverse the present industrial slowdown, plan expenditure has been given nearly 15 per cent higher allocation at Rs 1.13 trillion from a revised estimate of Rs 991.54 billion in 2001-02.

Non-plan expenditure would however be higher by close to around 12 per cent at Rs 2.96 trillion from Rs 2.65 trillion in 2001-02.

Due to the sharp shortfall in divestment target during 2001-02, the government has for the next fiscal delinked the plan expenditure from divestment proceeds.

Finance Minister Yashwant Sinha had last year set aside a lumpsum provision of Rs 50 billion out of the projected divestment receipts of Rs 120 billion to be linked to plan expenditure.

On account of higher collection from indirect tax revenue, revenue deficit as a percentage of the GDP is expected to decline to 3.8 per cent of the GDP from 4 per cent in 2001-02.

Interest payments are expected to increase marginally to Rs 1.17 trillion from Rs 1.07 trillion estimated for 2001-02 due to a corresponding marginal increase in borrowing and other liabilities to Rs 1.35 trillion from Rs 1.31 trillion estimated for 2001-02.

The marginal increase in interest payments would in turn help contain the primary deficit (calculated as fiscal deficit minus interest payment) to 0.7 per cent of the GDP at Rs 181.34 billion in 2002-03.

PTI

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