Even as the low GDP (gross domestic product) and core infrastructure growth numbers came as a disappointment to the government, the fiscal deficit figure for 2012-13 was something to cheer about.

With larger than anticipated mop-up by way of taxes coupled with higher non-tax collection, the fiscal deficit for 2012-13 worked out lower at 4.89 per cent of the GDP, significantly below the revised estimate of 5.2 per cent.

While the government had budgeted for a revenue realisation of Rs. 10.38 lakh crore during 2012-13, the revised estimates had pegged the direct taxes mop-up at Rs. 5.65 lakh crore with another Rs. 4.69 lakh crore coming from indirect taxes. During the course of the fiscal year, while there was a marginal slippage in direct tax collection, the revenue mop-up through indirect tax mop- up ended up exceeding the revised estimates.

Alongside, with the total expenditure pegged at Rs. 14.30 lakh crore, the government’s expenditure was consciously compressed through strict monitoring of spending by various departments. In the Budget, while the government had pegged the fiscal deficit at Rs 5.20 lakh crore or 5.2 per cent of GDP for 2012-13, the data released by the Controller General of Accounts (CGA) show the fiscal gap between expenditure and revenue at Rs 4.89 lakh crore, or 4.89 per cent of the GDP.

Finance Minister P. Chidambaram attributed the decline in the fiscal gap to additional tax revenues and savings on expenditure. “Many of the ministries could not spend money given in Revised Estimate. Also, there was some additional tax revenue of about Rs. 7,000 crore. So it has come down to 4.9 per cent [in 2012-13],” he said.

In keeping with its commitment to adhere to the path of fiscal consolidation, Mr. Chidambaram, in the Budget for 2013-14, had proposed to lower the fiscal deficit to 4.8 per cent of GDP this fiscal and subsequently reduce it gradually to three per cent by 2016-17.

With the fiscal deficit target nearly achieved in the previous fiscal itself, the Finance Minister sought to set himself a higher benchmark. “I don't wish to compress expenditure. Therefore, revenues have to go up... For 2013-14, [we] have to do much better than 4.8 per cent,” he said.