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Indian Budget 2008-09- Full Text-Feb 29, 2008

VII.BUDGET ESTIMATES

117. I shall now turn to the Budget Estimates for 2008-09.

118. The estimate of Plan Expenditure is placed at Rs.243,386 crore. As a proportion of total expenditure, it will be 32.4 per cent.

119. Non-Plan Expenditure is estimated at Rs.507,498 crore.

Revenue Deficit and Fiscal Deficit

120. It is widely acknowledged that the fiscal position of the country has improved tremendously. I am happy to report that the revenue deficit for the current year will be 1.4 per cent (against a BE of 1.5 per cent) and the fiscal deficit will be 3.1 per cent (against a BE of 3.3 per cent).

121. Further progress will be made in 2008-09. The revenue receipts of the Central Government for 2008-09 are projected at Rs.602,935 crore and the revenue expenditure at Rs.658,119 crore. Consequently, the revenue deficit is estimated at Rs.55,184 crore, which amounts to 1.0 per cent of GDP. The fiscal deficit is estimated at Rs.133,287 crore which is 2.5 per cent of GDP. Honourable Members will note that not only will I achieve the target for fiscal deficit under the FRBM Act, I have also left for myself some headroom. In the case of revenue deficit, I will meet the target of annual reduction of 0.5 per cent. However, because of the conscious shift in expenditure in favour of health, education and the social sector, we may need one more year to eliminate the revenue deficit. In my view, this is an entirely acceptable deferment.

Revisiting the Roadmap for Fiscal Adjustment

122. I acknowledge that significant liabilities of the Government on account of oil, food and fertilizer bonds are currently below the line. This accounting arrangement is consistent with past practice. Nevertheless, our fiscal and revenue deficits are understated to that extent. There is a need to bring these liabilities into our fiscal accounting. As a first step, I have shown these liabilities clearly in 'Budget at a Glance'. After the obligations on account of the Sixth Central Pay Commission become clear, I intend to request the Thirteenth Finance Commission to revisit the roadmap for fiscal adjustment and suggest a suitably revised roadmap.