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Centre may miss fiscal deficit target: FM

NEW DELHI: In a first-time admission, Finance Minister P. Chidambaram on Wednesday indicated that even as the Government would do its best to remain as close as possible to the fiscal and revenue deficit targets set for the current financial year, they may overshoot the budgeted estimates owing to the ongoing global economic crisis.

Speaking at a USAID function here, Mr Chidambaram said: “Thanks to the global financial crisis, which is exerting pressures on all economies, it is likely that we may overshoot budget targets [for fiscal and revenue deficits].” Against the 2008-09 budget targets of reducing the fiscal deficit to 2.5 per cent of the GDP (gross domestic product) and revenue deficit to one per cent of the GDP, Mr Chidambaram pointed out that the Centre would be bringing down the fiscal deficit to below three per cent and revenue deficit to about 1.0-1.1 per cent this year. “If we are not able to achieve the targets [fiscal & revenue deficits] by March 31, 2009, I am sure we can achieve them by March 31, 2010. I often console myself by saying that we waited 60 odd years to achieve some fiscal discipline, it does not matter to wait for one more year,” he said.

Noting that the Centre was not faring as well as the States in terms of reduction in fiscal and revenue deficits, the Finance Minister asked the State governments to cut the tax rates on transfer of property so as to enhance their revenue yield from this sector. “I think we must look at taxes on transfer of property in India, reduce the tax rates and reduce the transaction cost,” he said, while noting that it would then be a big source of revenue. At present, a large number of transactions in property go untaxed as the tax rates and transaction costs are so high, he said.

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