A strong rebound in factory output, better-than-estimated windfall from auction of 3G telecom spectrum and robust receipts by divesting equity in public sector companies has ensured that fiscal consolidation is progressing faster than expected, the finance ministry said on Tuesday.
“Almost all major components of tax revenue have shown better than estimated growth during the first half of 2010-11, including direct and indirect taxes,” the finance ministry’s mid-year analysis said.
Non-tax receipts were also significant at R1,64,819 crore during April-September 2010 — an unprecedented 180% growth — due to the higher receipts from telecom 3G spectrum and BWA receipts.
“Non-debt capital receipts were also higher due to disinvestment receipts. With the robust disinvestment pipeline in place, the budgeted estimate of R40,000 cr would be met,” it said.
With the prevailing trends in revenues and expenditures, the target for the fiscal deficit of 5.5% of GDP would be expected to be met. “This was crucial in sustaining consumption, maintaining investment spending and targeting spending on the social sectors. Now... a carefully calibrated exit of stimulus is taking place while guarding against any downsides,” it said.