The Fiscal Policy Strategy Statement
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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.
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.
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.
