The combined fiscal deficit of the Centre and the states has touched 9.7 per cent of GDP for the fiscal 2009-10, much higher than 8.5 per cent in the previous fiscal, the Upper House was informed on Tuesday.
"The rise in the fiscal deficit to GDP ratio since 2008-09 reflects short-term expansionary policy to revive aggregate demand and mitigate the impact of the global financial and economic crisis," minister of state for finance Namo Narain Meena said in a written reply to the Rajya Sabha.
According to the budgetary estimates, the fiscal deficit for 2009-10 was Rs 5,95,090 crore, or 9.7 per cent of GDP. This was higher than the fiscal deficit for 2008-09 of Rs 4.71 lakh crore which was 8.5 per cent of GDP and a deficit of Rs 1.97 lakh crore, or 4 per cent of GDP.
He said the government has already initiated the process of rolling back the stimulus packages provided at the time of financial crisis. "As such expansion is not sustainable in view of its impact over the long-run growth and price stability, the budget 2011 has initiated partial rollback of stimulus measures," Meena said.
For FY11, the fiscal deficit of the Centre is budgeted at Rs 3,81,408 crore (5.5 per cent of GDP), he said, adding the rolling targets for the fiscal deficit are pegged at 4.8 per cent and 4.1 per cent for 2011-12 and 2012-13.
"The 13th Finance Commission has unveiled a roadmap for fiscal consolidation and broad adherence to it by the Centre and states would help restore fiscal health and return to robust growth path," Meena said.