The Reserve Bank of India's Report on Currency and Finance 2002-03, released on Wednesday, has lashed out at the Centre's fiscal slippages.
"The quality of fiscal deficit has worsened, with the revenue deficit having increased substantially indicating that a larger share of borrowed funds is pre-empted by consumption expenditure," it said.
The Reserve Bank's observation is particularly significant in the context of Centre doling out goodies in the run-up to the general elections.
The RBI felt that the government has had modest success in expenditure containment but the "slippages from the budgetary projections underscores the deterioration in the quality of fiscal adjustment".
The growth in the gross fiscal deficit of the Centre was mainly on account of a higher revenue deficit.
The revenue deficit, in fact, constituted 81.9 per cent of the GFD, much higher than the projected budget estimate of 73.1 per cent.
This essentially means that a larger share of borrowed resources is used for current expenditure, leaving a lesser amount for investment.
The central government finances during the first eight months of the current fiscal year (April-November 2003) continued to be under pressure with all deficit indicators registering an increase, the RBI report said.
The major deficit indicators -- fiscal deficit, revenue deficit and gross primary deficit -- are expected to increase in absolute terms from the levels in the revised estimates for 2002-03 due to relatively high growth in expenditure.
Interest payments alone will pre-empt 48.5 per cent of the revenue receipts during 2003-04.
For 2003-04, the gross fiscal deficit is pegged at Rs 1,53,637 crore (as against the 2002-03 budgeted estimate of Rs 1,45,466 crore); revenue deficit at Rs 1,12,292 crore (Rs 1,04,712 crore); and gross primary deficit at Rs 30,414 crore (Rs 29,803 crore).
During the eight month period, the revenue deficit grew at 13 per cent and touched 68.3 per cent of the budget estimate of Rs 1,12,292 crore (Rs 1,122.92 billion).
The fiscal deficit was up 12.3 per cent and hovered at 61 per cent of the BE of Rs 1,53,637 crore (Rs 1536.37 billion). The gross primary deficit shot up 46.9 per cent and touched 78.3 per cent of the BE of Rs 30,414 crore (Rs 304.14 billion).
The fisc will be under pressure as the growth in aggregate expenditure (excluding the discharge of liabilities to the National Small Savings Fund) over the corresponding period of the preceding year, outpaced the growth in revenue receipts.
Including the expenditure on account of discharge of liabilities to the NSSF, the growth in aggregate expenditure was as high as 24.7 per cent.