The country’s gross fiscal deficit is expected to remain high in fiscal 2010, for the second consecutive year, Centre for Monitoring Indian Economy (CMIE) has said in its monthly review.
“We do not expect any significant upward revisions in government revenues in the final budget for FY’10, which will be presented in June 2009. Expenditure may be revised upward, albeit modestly, on account of increase in government’s effort to negate adverse impact of global liquidity crisis on the domestic economy,” CMIE said.
In the interim Budget for 2010 fiscal, gross fiscal deficit is estimated at Rs 3,32,835 crore. This is projected at 5.5 per cent of the GDP, marginally lower than the six per cent ratio in FY’09.
The 5.5 per cent of GDP ratio itself is a very high. The ratio is likely to remain higher than the budget estimate in fiscal year 2010, CMIE said.
Finance Minister Pranab Mukherjee in his budget speech said that conditions in the year ahead are not likely to be normal and, therefore, the high fiscal deficit is inevitable.
“We will return to Fiscal Responsibility and Budget Management (FRBM) targets once the economy is restored to its recent growth path,” he had said.