New Delhi: The government needs to provide an augmented fiscal deficit data in the budget to reflect the burden of off-budget items, including oil and fertiliser bonds on the exchequer, suggested an RBI Committee.
“The mode of calculating the fiscal deficit does not at present capture the impact of off-budget items or provide such figures separately,” said Financial Sector Assessment Committee headed by RBI Deputy Governor Rakesh Mohan.
“The gross fiscal deficit reported in the budget document needs to be accompanied by an augmented fiscal deficit to capture off-budget items, such as oil bonds, Food Corporation of India bonds and fertiliser bonds,” the report said.
The government defers the current liabilities by issuing bonds which have to be repaid in future from the budgets.
The suggestion comes ahead of the Budget 2009-10, which is likely to be presented in the first week of July by finance minister Pranab Mukherjee.
The Prime Minister’s Economic Advisory Council (PMEAC) too in its latest review of the Indian economy had expressed concern over sharp rise in off-budget liabilities of the government saying “it could be sizeable”.
The 13th Finance Commission, headed by Vijay Kelkar, is also looking into the issues concerning off-budget liabilities of the government.
The PMEAC had said, ”under-budgeted and off-budget liabilities could add up to 5 per cent of the GDP. A significant part of off-budget liabilities (during 2008-09) was on account of phenomenal increase in oil prices.”
Even excluding the off-budget items the fiscal deficit of the government during 2008-09 rose from the original estimate of 2.5% to 6% of the GDP.
The Financial Sector Committee has also underlined the need for appointing a working group to restructure and rationalise the budget head structure for reporting expenditure.