Fiscal alarm bells in Q1 report card

According to the report, of the budgeted amount of Rs 95,312 crore, the revenue deficit during April-June, 2005, has already touched Rs 47,311 crore. This deficit could have been higher but for the bouyant tax collections, especially corporate tax collections that jumped by 182 per cent during April-June 2005 as compared to the same period last fiscal.

Overall tax revenues are up 26 per cent in the first quarter.

On the fiscal side, the report says fiscal deficit of the Centre was relatively higher at Rs 54,517 crore in April-June 2005-06 as compared to Rs 41,681 crore in the same period last year. The deficit was 36.1 per cent of the budgeted Rs 1,51,144 crore. This was relatively higher than 30.3 per cent in the year-ago period.

On the quarter that has passed, the finance ministry stated that ‘‘the economy performed satisfactorily in the first quarter of the current year’’ but maintained that GDP growth would be 6.9 per cent during 2004-05.

This performance is despite, what the report terms ‘‘concerns arising out of high and volatile level of international crude prices and recent natural calamities’’.

The report stated that though delayed monsoons had its impact on kharif sowing in some parts of the country, ‘‘rainfall till July 20 was normal to excess in 81 per cent of the met sub-divisions. The comfortable reservoir position augurs well for rabi crop.’’

In terms of sectoral performance, the ministry says industry grew by 10.3 per cent in April-June, with manufacturing achieving 11.2 per cent growth. Though infrastructure posted a lower 5.5 per cent growth during first quarter, it was picking up and grew by 10.2 per cent in June.

However, based on the poor performance of this sector in July 2005, Chief Economic Advisor Ashok Lahiri told reporters that ‘‘infrastructure needs further push’’.

Inflation, however, gradually came down from 5.7 per cent in the beginning of the year to 4.1 per cent in June end, the report stated.

While exports grew by 19.5 per cent, imports were up by 38 per cent. Foreign exchange reserves on the other hand were at $132.9 billion in June end and the rupee showed signs of appreciation against the dollar.

The report even goes on to add that ‘‘equity valuations as measured by Nifty and Sensex, are at all-time highs’’ and that bank credit grew by Rs 60,959 crore in April-June.