Processing .....please wait.. 
The article has been forwarded.... 
India's fiscal deficit falls, to break shackles for 8% growth
By agencies
|
Wednesday, 01 June 2005, 19:30 IST
NEW DELHI: India's fiscal deficit for the financial year ended March 2005 stood at 4.11 percent, much below the government's 4.5 percent target, surprising analysts who said the trend is unlikely to continue in the current year.
Figures released by the government showed the fiscal deficit at 
1.28 trillion, way below the budget estimate of 1.39 trillion set in February, largely due to a fall in spending and buoyant revenue collections.
Analysts said the latest fiscal deficit numbers place the government in much better shape to control the stubbornly high deficit in the coming year.
The latest numbers also mean the government has stuck to a deficit reduction act under which it is supposed to cut the deficit-to-GDP ratio by 0.3 percentage point each year.
It has successfully cut the deficit to 4.11 percent from 4.5 percent in the previous year.
But most analysts said the government is unlikely to end the current year ending March 2006 with a deficit lower than the targeted 4.3 percent as it has outlined plans for nearly $6 billion of social spending, in line with the communist-backed government's agenda for alleviating the plight of the poor.
The government is expecting 7 percent growth in Asia's fourth-largest economy to boost revenues by over 17 percent to fund new projects in health, water and education projects in the rural parts of the vast South Asian country.
Much of the improved fiscal report came from buoyant revenue collections, which exceeded the target at 3.70 trillion, thanks largely to a drive by the tax department to collect dues accumulated over previous years.
The government also kept spending on a tight leash with expenditure totaling just 4.98 trillion, lower than the estimated 5.05 trillion.
India's precarious fiscal situation has raised eyebrows at credit rating agencies, whose views help determine the cost of government borrowing. Federal deficit figures do not include state deficits, which push the overall shortfall to around 10 percent of GDP.
Most international rating agencies cite the country's runaway deficit as a major hurdle stopping India from achieving sustained 8 percent growth needed to lift some of the country's 260 million poor out of poverty.
1.28 trillion, way below the budget estimate of 1.39 trillion set in February, largely due to a fall in spending and buoyant revenue collections.
Analysts said the latest fiscal deficit numbers place the government in much better shape to control the stubbornly high deficit in the coming year.
The latest numbers also mean the government has stuck to a deficit reduction act under which it is supposed to cut the deficit-to-GDP ratio by 0.3 percentage point each year.
It has successfully cut the deficit to 4.11 percent from 4.5 percent in the previous year.
But most analysts said the government is unlikely to end the current year ending March 2006 with a deficit lower than the targeted 4.3 percent as it has outlined plans for nearly $6 billion of social spending, in line with the communist-backed government's agenda for alleviating the plight of the poor.
The government is expecting 7 percent growth in Asia's fourth-largest economy to boost revenues by over 17 percent to fund new projects in health, water and education projects in the rural parts of the vast South Asian country.
Much of the improved fiscal report came from buoyant revenue collections, which exceeded the target at 3.70 trillion, thanks largely to a drive by the tax department to collect dues accumulated over previous years.
The government also kept spending on a tight leash with expenditure totaling just 4.98 trillion, lower than the estimated 5.05 trillion.
India's precarious fiscal situation has raised eyebrows at credit rating agencies, whose views help determine the cost of government borrowing. Federal deficit figures do not include state deficits, which push the overall shortfall to around 10 percent of GDP.
Most international rating agencies cite the country's runaway deficit as a major hurdle stopping India from achieving sustained 8 percent growth needed to lift some of the country's 260 million poor out of poverty.