core sector communique

Government Reverts to the Path of Fiscal Consolidation; Fiscal Deficit to be Reduced to 5.1% of GDP in 2012-13

Fiscal Deficit during 2011-12 (Revised Estimates) was Rs.5,21,980 crore which is 5.9 per cent of GDP. Due to un-precedented global financial crisis, the Government had to take fiscal expansionary measures to protect Indian economy from the adverse impact of global financial crisis. This resulted in increase in Fiscal Deficit from 4.6 per cent of GDP in BE 2011-12 to 5.9 per cent in GDP RE 2011-12. Government is determined to bring the deficit down to a more sustainable level. To reinforce its commitment towards fiscal consolidation, government has bring out amendment in the FRBM Act, 2003, which has been introduced in the Lok Sabha on 16.03.2012 as part of Finance Bill 2012-13. The Government has reverted back to the path of fiscal consolidation with gradual exit from the expansionary measures in a calibrated manner. The reduction in Fiscal Deficit from 5.9 per cent of GDP in RE 2011-12 to 5.1 per cent of GDP in BE 2012-13 is designed with a mix of reduction in total expenditure as percentage of GDP and improvement in gross tax revenue as percentage of GDP. With reprioritization of expenditure towards developmental side and curtailing the growth in non-developmental expenditure, total expenditure is estimated to decline as percentage of GDP. Gross tax revenue as percentage of GDP with additional resource mobilization measures is estimated to increase from 10.1 per cent in RE 2011-12 to 10.6 per cent of GDP in BE 2012-13. This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Rajya Sabha today.