A day after the Union budget, even as analysts questioned the sanctity of estimates under various heads, top officials of the Finance Ministry sought to stress that Pranab Mukherjee's prime effort was at addressing the basic necessity of fiscal consolidation along with credible projections.

In a post-budget interaction with the print media here on Saturday, Finance Secretary R.S. Gujral said fiscal consolidation could be achieved by either increasing revenue mobilisation through higher taxes or by lowering expenditure, or a combination of both. However, since curtailing the spending during 2012-13 would further decelerate growth, the budget laid stress on raising revenue.

At the same time, while conceding that the across-the-board increase in excise duty and service tax from 10 to 12 per cent would translate into about one percentage point increase in headline inflation for the consumer — as a part of the price hike would be absorbed by the manufacturer — the tweaking in indirect taxes, Mr. Gujral said, was merely a rollback to near the rates of 14 per cent that prevailed during the pre-global crisis levels.

On the credibility of the fiscal deficit projection of 5.1 per cent of the GDP (gross domestic product), especially when there is no indication of the subsidy bill coming down, the officials maintained that the outgo on oil and fertilizer would be capped at two per cent of the GDP, on the assumption that there would be some action on the reform front during the fiscal.

As for food subsidy, Mr. Gujral said the government had to tackle malnutrition and was committed to providing food to the poor under the law, which was expected to kick in by December.

Likewise, stressing the credible projection of mopping up Rs.30,000 crore through the sale of the equities of public sector undertakings, Disinvestment Secretary Mohammad Haleem Khan said that had the target been set at Rs.40,000 crore for 2012-13, the fiscal deficit would have been pegged at five per cent or even lower, depending on higher equity sell-off estimates.

However, after detailed deliberations, the Finance Ministry decided to opt for a “realistic” target, even as more than a dozen PSUs were lined up for disinvestment during the year.

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