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India's Ballooning Fiscal Deficit

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The Centre's fiscal deficit in the April-November period of 2012-13 was Rs 4.13 lakh crore - 80.4 per cent of the Budget Estimates (BE).

In absolute terms, the fiscal deficit - gap between expenditure and revenue collection - was Rs 4.13 lakh crore during the first eight months of the current fiscal, according to Controller General of Accounts (CGA) data released December 31.

This is slightly better than the fiscal deficit position last year when it was 85.6 per cent of the Budget target. The improvement is mainly on account of some tightening on the expenditure front.

Net tax receipts during the April-November period stood at Rs 3.7 lakh crore, while total expenditure was about Rs 8.67 lakh crore.

For the full fiscal ending March 2013, the government had budgeted the fiscal deficit at Rs 5.14 lakh crore, or 5.1 per cent of the GDP. However, it raised the target to 5.3 per cent of GDP last month.

The fiscal deficit was 5.8 per cent of GDP in 2011-12.

The high fuel, fertiliser and food subsidy outgo is one of the major reasons for the ballooning fiscal deficit.

The government has already imposed measures like rationalisation of expenditure and optimisation of available resources to improve fiscal deficit condition.

This includes 10 per cent mandatory cut on non-plan expenditure in the current year, ban on holding of meetings and conferences at 5-star hotels, ban on creation of plan and non-plan posts and restrictions on foreign travel.

In order to bring down the subsidy, the government in September raised the diesel price by a steep Rs 5 per litre and capped the number of subsidised cooking gas cylinders to six per household in a year.

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