New Delhi, July 1 (UNI) Finance Minister P Chidambaram today said fiscal deficit for the current financial year will be below its budget target due to expected robust tax receipts.
Mr Chidambaram told reporters here that the government allocates the bulk of its expenditure early in each financial year, though tax payments tend to pick up later on.
The Finance Minister, however, said an improvement in the fiscal deficit would thus come later.
''At the end of the year, we will do better than the budget estimates,''Mr Chidambaram said, According to stringent conditions laid down by the Fiscal Responsibility and Budget Management Act, the government plans to trim down the fiscal deficit to 2.5 per cent of the GDP in 2008-09 from 2.8 per cent in the previous year.
The government faces pressure on the fiscal deficit on account of huge subsidies it doles out to the oil sector as well as the funding of the flagship programmes of the UPA government, mostly entailing development of social sectors.
It has also written off farm debts totalling Rs 60,000 crores, the money for which is to be siphoned-off from the Budget provisions.
To tame inflation, which is a sensitive topic in the world of Indian politics, the government has cut custom and excise duties on petrol, diesel and liquified petroleum gas totalling more than Rs 22,600 crores.
The government has also made exports more difficult and imports cheaper for a host of items relating to essential commodities.
All these items will cost the exchequer a huge amount and impose pressure on the fiscal deficit, but the Finance Minister exuded confidence that the fiscal deficit target would be met.
Earlier, Mr Chidambaram told a conference that robust economic growth would raise tax revenues further.
''India has recorded splendid growth in the last few years. Our tax to GDP ratio has gone up from 9.2 per cent in 2003-04 to 12.8 per cent in 2007-08, and it is expected to be more than 13 per cent this fiscal,'' he said.
Mr Chidambaram was speaking at the Diamond Jubilee Celebrations of the Institute of Chartered Accountants of India (ICAI).
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