Faced with a widening fiscal deficit due to a dip in revenue and growth in expenditure, finance minister Pranab Mukherjee Saturday called for containing the shortfall, saying it should be within a 'manageable limit'.
"We cannot allow our fiscal deficit to go beyond a certain limit. We need to manage our receipts and payments so that our fiscal deficits, sovereign borrowings and debts are within manageable limits," Mukherjee said while inaugurating the new administrative building here of the income tax department.
There are growing apprehensions that the Centre's fiscal deficit -- the gap between overall revenue and expenditure -- is likely to exceed the budget estimate of 4.6 per cent of gross domestic product (GDP) this fiscal.
The government's financial problem has aggravated because of a rising subsidy bill and slow progress on the disinvestment front. While the subsidy bill during the current fiscal is expected to shoot up by an additional Rs.one lakh crore, the government is unlikely to meet the disinvestment target of Rs.40,000 crore.
The government has already announced borrowing an additional Rs.90,000 crore to bridge the revenue-expenditure gap.
The finance minister said India needed to learn lessons from the sovereign debt crisis in Europe.
"We need to learn some lessons from the Euro zone crisis where sovereign fiscal deficits of some have surpassed 100 percent of their gross domestic product (GDP). We cannot insulate ourselves from what is happening in the global economy, but a prudent fiscal deficit management is the need of the hour," said Mukherjee.
Pointing out that the initial target of Rs.5.85 lakh crore of direct tax collection this fiscal has been revised and lowered, Mukherjee said emphasis had to be placed on providing improved tax administration to ensure better collection.
"Efforts are there to mop up additional revenue and to improve the collection of taxes. We need to provide better taxpayer services. More the services, better will be the compliance."
He also said the number of direct tax payers has increased from 22 lakh in 2000 to 23.56 lakh in recent years.
M.C. Joshi, chairman, central board of direct taxes (CBDT), said direct tax collection would go up in the last two months of the financial year.