Fiscal Deficit to be Brought Down to 5.1% of GDP in 2012-13 From 5.9% In 2011-12

The Fiscal Deficit in the Union Budget 2012-13 has been pegged at Rs.5,13,590 Crore which is 5.1% of the GDP. In 2011-12 RE, it was 5.9% of the GDP and Rs.5,21,980 Crore in absolute terms. After taking into account other items of financing, the net market borrowings through dated securities through finance this deficit is Rs.4,79,000 Crore. With this the total debt stock at the end of 2012-13 would work out at 45.5% of GDP as compared to the 13th Finance Commission target of 50.5% of GDP. The effective revenue deficit in BE 2012-13 works out to Rs.1,85,752Crore which is 1.8% of GDP.

This has been achieved due to various steps taken by the Government for fiscal consolidation despite fall in the direct tax collectionsby Rs.32,000 Crore and the Government absorbing duty reduction in petroleum sector with annual revenue loss of Rs.49,000 Crore in the year 2011-12. The Government also had to incur higher expenditure on petroleum and fertilizer subsidy to insulate people from the rising prices.

Source : Equity Bulls

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