High fiscal deficit inevitable, says governmentFebruary 16th, 2009 - 7:06 pm ICT by IANS
New Delhi, Feb 16 (IANS) The government Monday said high fiscal deficit was inevitable given the global economic scenario and increasing public expenditure.
External Affairs Minister Pranab Mukherjee in his interim budget speech pegged the current fiscal’s deficit at 6 percent of the gross domestic product (GDP), but hoped that it would come down to 5.5 percent in next financial year.
“Our government decided to relax the FRBM (fiscal responsibility and budget management) targets in order to provide much needed demand boost to counter the situation created by the global financial meltdown,” Mukherjee told the Lok Sabha.
“We should not be too much obsessed with fiscal deficit. If we have to (cross), let us do so,” he said, adding: “Of course, corrective measures have to be taken when the revenues have revived.”
Finance Secretary Arun Ramanathan shared the view. “In the backdrop of the current situation, high fiscal deficit is inevitable,” he told reporters after Mukherjee’s budget speech.
Economic Affairs Secretary Ashok Chawla said the inflation rate would be between 4-5 percent in the next fiscal.
The government proposes to borrow Rs.3.08 trillion (Rs.308,6,47 crore) through market loans in the next fiscal beginning April 1.