India’s fiscal deficit will be higher: AhluwaliaDecember 7th, 2008 - 8:13 pm ICT by IANS
New Delhi, Dec 7 (IANS) Planning Commission Deputy Chairman Montek Singh Ahluwalia Sunday said India’s fiscal deficit for the current fiscal will be higher than budgeted for but this will not be an adverse development in the context of the global meltdown.”Our fiscal deficit will be higher. But that will be a desirable development,” Ahluwalia said at a press conference here, soon after unveiling a growth stimulus package that includes a four percent cut in central value added tax (VAT).
“To what extent the fiscal deficit will be higher - we don’t have the numbers yet.”
According to Finance Secretary Arun Ramanathan, the impact of the four percent cut in central VAT would be Rs.8,700 crore (Rs.87 billion/$1.75 billion).
In addition, the government will also seek parliament’s approval for plan expenditure of another Rs.20,000 crore (Rs.200 billion/$4 billion) in the remaining four months of the fiscal.
A slowdown in tax receipts and the measures unveiled Sunday are also expected to impact on the fiscal deficit, which was budgeted at 2.5 percent of gross domestic product for 2008-09 - 30 basis points lower than the 2.8 percent in the previous year.