The Finance Ministry today asserted that the government has not only been able to achieve the targets set under the Fiscal Responsibility and Budget Management Act, but has also “reasonably” enabled most of the states to reduce their fiscal stress.In its mandatory quarterly review of reciepts and expenditure (for 2005-06) tabled in Parliament today, the Finance Ministry points out that the deficit indicators “show an improvement” over the budget estimates.However, it also mentions that as compared to the revised estimates, “the marginal deviation” in revenue deficit could be explained more by non-fiscal related factors and was “mainly due to delayed credit of a part of tax revenues to government” that “spilled over to April, 2006’’.According to the review, provisional accounts of revenue deficit for 2005-06 placed the revenue deficit at 2.7% as against the revised estimate of 2.6% of GDP, while fiscal deficit remained within the target of 4.1%.The government’s review of performance on the FRBM targets comes against a backdrop of the Indian economy clocking a high 9.3% growth during the fourth quarter of 2005-06 resulting in an overall GDP growth of 8.4% for the entire financial year.During this phenomenal growth period, the finance ministry says that “bulk of the fiscal deficit was financed through direct borrowings from the open market”. It says that the introduction of 182 days treasury bills and investment of surplus cash balances of state governments in non-marketable 14 days intermediate treasury bills, debt reciepts and more specifically internal debt had exceeded the budget estimate.
