The Hindu : Business : FM hopeful of wiping out revenue gap by next fiscal

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Wednesday, Jul 18, 2007
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FM hopeful of wiping out revenue gap by next fiscal

Special Correspondent

Confident of reducing the fiscal deficit to 3.3 per cent of GDP

— Photo: Rajeev Bhatt

BRIDGING REVENUE GAP: Union Finance Minister, P. Chidambaram (left), with Revenue Secretary, P. V. Bhide, at a conference in New Delhi on Tuesday.

NEW DELHI: A day after the Prime Minister’s Economic Advisory Council (EAC) expressed concern over achieving the revenue deficit target, Finance Minister P. Chidambaram exuded confidence that the gap would be wiped out by 2008-09 as enunciated in the Fiscal Responsibility and Budget Management (FRBM) Act.

Referring to the EAC report while talking to newspersons after his meeting with Chief Commissioners of Income-tax here on Tuesday, Mr. Chidambaram pointed out that the Council only talked about the difficulty in meeting the revenue deficit target but it did not conclude that the target would not be met.

“There is subtle difference between difficult to meet and would not be met… We have been right so far [in meeting the revenue deficit target], there is no reason why we should be wrong next year,” he said.

In its report released on Monday, the Council had observed that while the fiscal deficit reduction exercise was on course, it would be difficult to phase out the revenue deficit by 2008-09. “The revenue deficit is targeted to be cut to 1.5 per cent of GDP (gross domestic product) in the current fiscal and eliminating it in one year would seem to be infeasible,” the EAC said.

Fiscal deficit

Apart from the revenue deficit, the Finance Minister was also confident of reducing the fiscal deficit to 3.3 per cent of GDP as targeted, as also in collecting Rs. 2,67,490 crore as direct tax revenue this fiscal. “Whatever I have proposed in the Budget, I will achieve it,” he said.

Mr. Chidambaram’s confidence stems from the fact that the total mop-up in direct taxes during the first three months at Rs 41,154 crore has been on target. “We are on target. I am confident that the targets [direct tax collections] would be achieved [this fiscal]…Anything more than that, I will welcome,” he said.

As per budget estimates for the current fiscal, corporation tax collection is targeted to grow by 17.44 per cent to more than Rs. 1,68,400 crore. With personal income-tax targeted to increase by 14.5 per cent to over Rs. 98,770 crore, the overall mop-up through direct taxes alone is expected to be Rs. 2,67,490 crore, up 16.31 per cent.

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