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Fiscal outcome Remains Broadly on the Consolidation Trac
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The fiscal outcome in the first nine months of the current financial year remained broadly on the consolidation track charted by the Budget, says the Economic Survey presented by the Union Finance Minister, Shri Pranab Mukherjee in the Parliament today. With growth reverting to pre-crisis levels in the current fiscal, revenues remaining buoyant and a much higher than budgeted realization in non-tax revenues arising from telecom 3G/BWA auctions, there was headroom for higher levels of expenditure at the given fiscal deficit targets. Growth in gross tax revenue in the nine months of the current fiscal was 26.8 per cent (year-on-year) as against a level of 17.9 per cent envisaged for the fiscal by the Budget Estimates. Non-tax revenues grew by 136.4 per cent in the first nine months of current fiscal as against a level of growth of 23.7 per cent in the corresponding period last year in the first nine months and 32 per cent envisaged by the budget estimates (BE). Revenue receipts grew by 50 per cent.
In major taxes, the following were the year-on-year growth rates as against (envisaged by the BE) : customs 65.8 per cent (36.1 per cent); Central Excise 36.5 per cent (29.4 per cent) ; Service tax 19.7 per cent (17.2 per cent); Corporate income tax 20.4 per cent (18.1 per cent) and personal income tax 13.1 per cent (-3.6 per cent). The deficit indicators are expected to remain on the targeted levels even with a pickup in expenditure in the next three months.
According to the Survey, year-on-year growth in total expenditure in the first nine months of the current fiscal was 11.2 per cent as against 18.5 per cent in 2009-10 (April-December) and 8.5 per cent envisaged for the full year 2010-11 (BE). In the first nine months of the 2010-11 (April-December), while Plan expenditure grew by 18.9 per cent, the non-plan expenditure grew by 7.9 per cent as compared to 23.0 per cent and 16.6 per cent respectively for the same period last year. As per CGA, 84.7 per cent of the gross market borrowings were completed by the end of December 2010.
As per the advance estimates, the nominal GDP for 2010-11 placed at Rs.78,77,947 crore which represent a year-on-year growth on 20.3 per cent and was 7.8 percentage points higher than the envisaged. As a result the budgeted fiscal and revenue deficits are 4.8 per cent (as against 6.8 per cent for the 2009-10 BE) and 3.5 per cent respectively as a proportion to the GDP for the current fiscal year.
The Survey says that with the roadmap laid out by the Government Debt Report, 2010 the prospects of fiscal consolidation in the medium term and beyond are bright. Thus it is critical to anchor expenditure reforms to realize the projected deficit levels. A beginning has already been made with the reforms announced in subsidies, some of which have already been implemented. Going forward, deepening the reform process would hold the key to sustaining the fiscal consolidation process.
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