The government is striving to rein in fiscal deficit at 5.3 per cent of the gross deficit product (GDP) by keeping a check on its expenditure, Finance Minister P. Chidambaram said in a written reply to the Rajya Sabha. In an attempt to allay concerns about India's widening fiscal deficit, he said the government is checking its spend on central subsidy as well as cutting non-plan expenditure by 10 per cent.
Plans are also afoot to roll out the Direct Tax Code as well as expedite regulatory approvals for infrastructure projects. It has also issued a draft note on the sale of surplus government land, Mr Chidambaram added.
The Finance Minister had also indicated earlier that the Budget for the financial year 2014 would focus on cutting wasteful expenses and promoting investments while protecting key social welfare programmes.
However, the markets are largely worried that the government will be unable to contain fiscal deficit to the 5.3 per cent target. It had revised the target to 5.3 per cent from the budgeted 5.1 per cent for this financial year in October in view of a burgeoning oil and food subsidy bill as well as subdued revenue collection.
In an interview with NDTV, Barclays Capital chief India economist Siddhartha Sanyal said the fiscal deficit this year will likely be in the 5.5-5.7 per cent range.
A Deutsche Bank report too had earlier stated that the government may find it difficult to achieve the revised 5.3 per cent target as fiscal measures may fall short or prove to be too late amid weak revenue trends.
While the government announced a slew of reforms, the reality of India’s deep‐seated structural problems has begun after an initial bounce in investor sentiment. After surging over 15 per cent in the two months to October, the Sensex has dipped in recent weeks. The rupee too has given back most of its gains, a Moody's Analytics report said.
The government fell inadequately short of its target to raise Rs 40,000 crore from the auction of 2G spectrum. In the auction, the government raised about Rs. 9,000 crore—one-fourth of its target. Less than 60 per cent of the airwaves on offer found takers because carriers found the auction too pricey - the reserve price was seven times higher than what companies paid in 2008.
Also, the government had planned to raise Rs. 30,000 crore from the sale of its stake in state-owned enterprises, but not a single PSU hit the market in the first 10 months of 2012-13. It is now planning to kick start the disinvestment process tomorrow with the sale of a 4 per cent stake in Hindustan Copper.
With inputs from Agencies