Govt pegs tsunami losses at Rs 5,322 cr; deficit to be hit

RBI governor, Y.V. Reddy, said on Thursday that while last month’s deadly tsunami would only have a limited economic impact, it would put some upward pressure on the fiscal deficit. The government is already fighting to keep its deficit below a target 4.4 per cent of gross domestic product, and its finances could be further stretched after paying for relief and reconstruction in Indian regions hit by the disaster.

“On the fiscal deficit, there will be some impact. On expenditure there will be some impact. On the revenue side, there is not expected to be any impact,” Reddy said in a speech to bankers in Pune.

RBI was preparing a final assessment of the economic damage caused by the devastating tsunami, and this would be released in a few days. “Our preliminary information in terms of the impact is that it is highly localised,” Reddy said. —Agencies