NEW DELHI, Oct 28: Finance Ministry will unveil the roadmap for fiscal consolidation within a month and make changes in the FRBM regulations, with a view to gradually lower the fiscal deficit to 3 per cent of the GDP by 2016-17.
“FRBM regulations will be amended. The Finance Minister is looking at it and the announcement will be made within a month,” Department of Economic Affairs Secretary Arvind Mayaram told.
He said the new targets would be mentioned in the regulation to the Fiscal Responsibility and Budget Management (FRBM) Act. The Act proposed reduction of fiscal deficit to 3 per cent of GDP by 2009, but the exercise had to be abandoned as a result of the global financial crisis.
“We are working on how to reduce it and bring down fiscal deficit to 3 per cent by 2016-17. For current fiscal, we will keep it at 5.3 per cent,” he said, adding that an announcement could be made by the Minister either in Parliament or outside.
Mayaram said the finance ministry for the purpose of limiting the fiscal deficit at 5.3 per cent would focus on controlling expenditure and raising funds from disinvestments. The Budget for 2012-13 had pegged the fiscal deficit, the gap between revenue and expenditure, at 5.1 per cent of GDP.
“We will not go for additional borrowing. We will curb unnecessary expenditure and also expect to garner adequate resources through disinvestment,” Mayaram said.
For the current fiscal, the government aims to raise Rs 30,000 crore by way of disinvestment in state-owned companies.
Finance Minister P Chidambaram, soon after assuming charge, had appointed a three member committee under the chairmanship of 13th Finance Commission head Vijay Kelkar to suggest a roadmap for fiscal consolidation.
The Kelkar Committee in its report had suggested that the government should undertake reform initiatives, go ahead with disinvestments and reduce subsidies. Without these the fiscal deficit could shoot up to 6.1 per cent in the current fiscal, it said.
As per the roadmap given by the Committee, the Centre should aim to reduce the fiscal deficit to 4.6 per cent and 3.9 per cent by 2013-14 and 2014-15 respectively.
Although the government had pegged fiscal deficit for the current financial year at 5.1 per cent in the budget, it is likely to exceed the projection in view of rising subsidy bill and lower buoyancy in tax collections.
Finance Ministry officials are engaging in hectic parleys with the PSUs to speed up the process of disinvestment so that stake sale can take place in the second half of the fiscal.
To speed up the process, Disinvestment department has secured Cabinet approval for stake sale in five companies—Oil India, MMTC, Hindustan Copper, Nalco and NMDC—which could fetch over Rs 20,000 crore to the exchequer. (PTI)
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