The Fiscal Policy Strategy Statement (2007 - 08)
Controlling and managing
fiscal discipline while tackling competitive demands on
public resources and
tax expenditures against varied and frequently contravening expectations of
stake holders is a tough job.
The last three years’
fiscal results as measured against the
deficit targets, show the effectiveness of managing resources on the
FRBMA compliant road map. It is reassuring to see that deficits have been kept within the mandated limits. The upward growth has propelled the economy to take-off. Compared to the pre-FRBMA period, it looks much more encouraging, as it has been accompanied with a reduction in
fiscal deficit from a level of 5.9% of
GDP in 2002-03 to 3.7% of
GDP in RE 2006-07. During the same period, revenue deficit has gone down from 4.4% of
GDP to 2% of
GDP. Tax-
GDP ratio which was 8.8% in 2002-03, is estimated to go up to 11.4% in RE 2006-07.
Annual growth in
GDP, at constant (1999-2000) prices at factor cost in 2002-03 was 3.8%. The advance estimate of
GDP growth in 2006-07 is pegged at 9.2%.
The Fiscal Policy Strategy Statement for the Ensuing Financial Year:
The 2007-08
Budget has been presented in the background of continuing
robust economic growth and a better than
budgeted fiscal performance during 2006-07. A new
industrial revival, increasing
domestic savings, a pick-up in capital formation and a
rapid growth in exports are the positive points for raising resources and sharing prosperity. It is a challenge to find out the resources required to achieve the
Eleventh Five Year Plan objectives in the middle of global uncertainties. The Government is confident in taking up the challenge of keeping inflation within an acceptable ambit and reducing the costs of financing government spending, and at the same time recognizing the need for
inter-generational equity. Taking together all these opportunities and challenges, it is possible to reinforce the need for continuity in the prudent mix of
fiscal and
monetary policy measures, leaving no scope of missing the
annual deficit targets.
