Forecasting 'slippage' in budgeted revenue and fiscal deficit targets for the current financial year, the Economic Survey 2011-12 has called for financial consolidation based on structural reforms in government expenditure.
"The fiscal outcome in 2011-12 is likely to be affected by the macroeconomic setting which indicates sharp slowdown in industry and rising costs affecting profits," said the survey which was tabled in Parliament on Thursday.
In the first nine months of the current fiscal, gross tax revenue has grown by 12.2 per cent as against the BE (budget estimate) target of 17.3 per cent, it said.
On the other hand, as against a target of 4.9 per cent for the whole year, growth in total expenditure in the first nine months of 2011-12 was 13.9 per cent, which comprised 15.4 per cent growth in non-Plan expenditure and 10.8 per cent growth in Plan expenditure, the survey added.
"Consequently, a slippage is likely from the revenue and fiscal deficits budgeted," it said. Going forward, the survey said: "There is a need to anchor fiscal consolidation on structural reforms in expenditure."
While the targets will be missed this fiscal, the medium-term stance of fiscal consolidation could be salvaged, it added.
"What is critical here is that policies need to be in place to cater to uncertainties that might arise during the course of the year, particularly in dealing with risks like global oil prices that have acquired a systemic nature," the survey said.
According to the survey, the rapid build up in expenditure over the first nine months of the ongoing financial year and less than commensurate growth in revenue have led to high proportions of deficits.
In the April-December period, total expenditure was at Rs 8,96,361 crore, at 71.3 per cent of BE of Rs 12,57,729 crore.
During the same period, revenue receipts stood at Rs 4,98,491 crore, at 63.1 per cent of BE of Rs 7,89,892 crore while capital receipts were at Rs 3,97,870 crore, at 85 per cent of BE of Rs 4,67,837 crore
Revenue deficit for the nine month period was at Rs 2,86,104 crore, at 93.1 per cent of BE of Rs 3,07,270 crore. Fiscal deficit for the period stood at Rs 3,81,012 crore at 92.3 per cent of BE of Rs 4,12,817 crore.
The survey also highlighted the less than expected growth in corporation tax and excise as areas of key concern.
In the first nine months, corporation tax growth was at just 6 per cent as against a BE target of 20.2 per cent. Similarly, union excise also grew by just 8 per cent as against 18.2 per cent envisaged in BE for 2011-12.
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