New Delhi: Finance minister Pranab Mukherjee on Tuesday said government will stick to the fiscal deficit target of 4.6% of GDP for 2011-12 despite huge revenue sacrifice due to duty cut on petroleum products.
“I don’t think so because we are still trying to keep the target,” Mukherjee told reporters here to a query on whether revenue forgone due to slashing excise and customs duties on petroleum products would impact fiscal deficit target.
However, the finance minister said, the fiscal deficit would ultimately depend on final analysis based on revenue receipt and expenditure.
“But just now we need not rush to any conclusion,” he said.
In June while raising the price of diesel, kerosene and cooking gas, the government had also slashed the duties. The cuts would have meant a sacrifice of an annual Rs49,000 crore by the central exchequer.
However, since the rate cuts take effect for the remaining three quarters only, the total loss will be around Rs35,000-36,000 crore, including share of states.
The government had earlier expressed concern over dip in revenue collection, both direct and indirect taxes, due to volatility in global commodity prices and persistently high inflation.
The central government’s fiscal deficit surged by about 30% in the first two months of the current fiscal to Rs1.30 trillion on account of lower revenue collection.
The deficit was Rs 1 trillion in April-May, 2010.
The sharp rise in deficit is on account of 28% decline in tax revenues. Also, non-tax receipts more than halved in the first two months to Rs5,613 crore, from Rs12,761 crore in the corresponding period of the previous year.