The Centre is likely to target a growth rate of 7 per cent for 2003-04 -- and expects to contain the average inflation for the year below 4.5 per cent -- to project the fiscal deficit at under 5 per cent of GDP for the next fiscal.
According to government officials, a higher growth rate is achievable in the next fiscal because the Central Statistical Organisation last Friday projected a GDP growth of 4.4 per cent in the current fiscal.
This is significantly lower than the 5-5.5 per cent estimated by both the finance ministry and the Reserve Bank of India for 2002-03.
Officials said the near freeze in the gross budgetary support -- set at Rs 1,17,500 crore (Rs 1,175 billion) for the next fiscal -- for the central and state Plans would help the government project a lower fiscal deficit for 2003-04. The budget estimate of the fiscal deficit for 2002-03 is 5.3 per cent.
Planning Commission officials said at a gross budgetary support of Rs 1,34,000 crore (Rs 1,340 billion), as demanded by the panel originally, the fiscal deficit worked out to 5.2 per cent for 2003-04.
The finance ministry has, however, granted a gross budgetary support that is Rs 16,500 crore (Rs 165 billion) less than Yojana Bhawan's demand. This alone, officials said, would result in paring the deficit by 0.6 percentage points.
On conservative estimates, the officials said, the fiscal deficit for 2003-04 would be between 4.8 per cent and 5.0 per cent.
They also said the government's total expenditure for the next fiscal would only be marginally higher than the current year's estimate of Rs 4,10,300 crore (Rs 4,103 billion).
The Centre is hoping to make significant savings in non-Plan expenditure next year through lower interest payments.
Finance Minister Jaswant Singh has also indicated that funds should not be transferred to state governments and autonomous bodies without strict regulation. He sees considerable savings in this.
Singh will also be taking steps to recover user charges on several public services and will beef up recovery of loans.
