Industry & Economy
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Budget
Budget estimates for 2005-06
WHAT gives me satisfaction is that, while faithfully attempting to implement the mandate of the NCMP, I have been able to remain on the path of fiscal consolidation.
According to the revised estimates for 2003-04, the revenue deficit was 3.6 per cent and the fiscal deficit was 4.8 per cent of GDP.
The FRBM Act requires a reduction in the two ratios, respectively, of 0.5 per cent and 0.3 per cent every year. I am happy to inform the House that we will achieve this degree of fiscal correction in 2004-05, and the year is expected to end with a revenue deficit of 2.7 per cent and a fiscal deficit of 4.5 per cent of GDP.
Plan expenditure: Plan expenditure for 2005-06 is estimated, on a like-to-like basis, at Rs 1,72,500 crore.
However, the Budget shows Plan expenditure at Rs 1,43,497 crore, and the balance amount of Rs 29,003 crore will be raised as loans by the State Governments directly, in accordance with the recommendations of the TFC.
Non-Plan expenditure: Non-Plan expenditure in 2005-06 is estimated to be Rs 3,70,847 crore, the increase being mainly due to enhanced grants to the States as recommended by TFC.
Deficit targets: Mr Speaker, Sir, in the Budget Estimates for 2005-06, the total expenditure is estimated at Rs 5,14,344 crore. I estimate total revenue receipts of the Central Government at Rs 3,51,200 crore and the revenue expenditure at Rs 4,46,512 crore. Consequently, the revenue deficit is estimated at Rs 95,312 crore which is equal to 2.7 per cent of the estimated GDP. The fiscal deficit is estimated at Rs 1,51,144 crore, which is 4.3 per cent of the estimated GDP.
Consequent to accepting the recommendations of the Twelfth Finance Commission and the drastically changed pattern of devolution and funding, there has been a considerable strain in making the Budget for 2005-06. I was left with no option but to press the `pause' button vis-a-vis the FRBM Act. I am relieved that we have not been forced to go in the opposite direction. I may add that we are perilously close to the limits of fiscal prudence and there is no more room for spending beyond our means. I am confident that we can resume the process of fiscal correction with effect from 2006-07 and achieve the FRBM goals by 2008-09.
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