Unperturbed by the rise in the fiscal deficit, Finance Minister P Chidambaram on Thursday exuded confidence that it would remain within the target of 4.8 per cent of GDP in the current financial year.
"We will maintain the fiscal deficit at 4.8 per cent. That is the red line that will not be breached. I am confident that it will not be breached," he said at a press conference.
The minister was responding to a question about the possibility of the fiscal deficit rising after it touched 94 per cent of the budget estimate at the end of November. Chidambaram said government finances will improve in December and the fiscal deficit will decline.
Advance tax receipts came in December and the General Financial Rules, which restrict expenditure, will come into play, he said, adding that they would have a positive bearing on the fiscal deficit.
The government has proposed narrowing the fiscal deficit to 4.8 per cent in the current financial year and 3 per cent in 2016-17. It was at 4.9 per cent in 2012-13. The government, however, will have a tough task in restricting the fiscal deficit in view of poor revenue realisation and tardy progress of the disinvestment programme.
There are indications that the government would go in for a massive cut of about Rs 1 lakh crore in plan expenditure to contain the fiscal deficit.
The government has so far received Rs 3,000 crore (Rs 30 billion) from disinvestment as against the budget target of Rs 40,000 crore (Rs 400 billion).
India's fiscal deficit touched Rs 5,09,557 crore (Rs 5095.57 billion) during April-November, or 93.9 per cent of the annual target, the Controller General of Accounts (CGA) said on December 31. The gap was 80.4 per cent of the budget estimate at the end of November in 2012-13.
The target for the fiscal deficit -- the gap between expenditure and reveune -- was set at Rs 5,42,499 crore (Rs 5424.99 billion) for this financial year.