The Comptroller and Auditor General (C&AG), the government’s auditor, said on Friday that failure to bring down public deficit, as mandated by the Fiscal Responsibility and Budget Management (FRBM) Act, could affect the growth momentum.
“Any slippage in achieving the FRBM targets now could erode the gains already achieved,” the C&AG said in its report on Union Government Accounts for 2006-07 that was tabled in Parliament.
“As resources available for application for current services have depleted relative to GDP, it is critical these are used with optimal efficiency. These inefficiencies result from the inability to use the resources in time, delaying projects, and programme implementation rigidities,” the C&AG said.
It said that the ratio of revenue deficit to fiscal deficit indicates vulnerability of union finances, and observed that this ratio increased from an average of 46.26 per cent during the seventh five-year plan (1985-90) to the peak level of 124.77 per cent in 2003-04. “Complete elimination of revenue deficit as mandated by the FRBM Act may, therefore, need greater efforts,” the government's auditor said.
The FRBM Act stipulates that revenue deficit has to be wiped out by March 31, 2009 and reduce fiscal deficit by 0.3 per cent annually.