Fiscal Deficit India 2009

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Presentation Description

What fiscal deficit is, component of it, current scenario, reason for such fiscal deficit, how govt. monetize deficit and measure to reduce deficit.

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Presentation Transcript

How to reduce fiscal deficit : 

How to reduce fiscal deficit Presented by: Amit shah Puneet Bhutra

AGENDA : 

AGENDA Fiscal deficit- Meaning Government spending and government revenue Current scenario Reason for high fiscal deficit Deficit financing Measures to reduce fiscal deficit

Slide 3: 

“Spending needs to be better targeted to reduce wasteful expenditure. For instance, 1.The government can withdraw some tax concessions, 2.The third generation mobile license auctions will yield Rs.25,000 crores to it. and 3. Disinvestment of loss making public sector units will yield about Rs. 80,000 crores. These steps will bring DEFICIT back to about 6.5% of GDP”

Slide 4: 

Deficit????? Fiscal deficit??? Revenue deficit??? Primary deficit????

Slide 5: 

Fiscal deficit:- It is an economic phenomenon, where the government’s total expenditure surpasses the revenue generated . It is the difference between the government's total receipts (excluding borrowing) and total expenditure. Total Deficit= Primary deficit + Interest Payment Revenue deficit= Budgeted net Revenue – Actual net revenue Total budget deficit= Cyclical deficit + Structural Deficit Fiscal deficit= Government Spending – Government Revenue

Slide 6: 

Trend in deficits of Central government Source: Indiabudget.nic.in

Slide 7: 

Government Spending Government Consumption Government Investment Transfer Payment

Slide 8: 

Government revenue Tax revenue Non tax revenue Direct tax Indirect tax Administrative receipt Net contribution to public Other income

Current Scenario : 

Current Scenario Current Fiscal deficit for Sept’09: Rs.197775 Cr Gross Fiscal Deficit FY’09: 8.9% of GDP Total Revenue Receipt for FY’09: Rs.544651 Cr Total Expenditure for FY’09: Rs.881469 Cr

Slide 10: 

Fiscal deficit for the month of Sept’09 is Rs.15485 cr Higher industrial and economic growth lead reduction in Fiscal deficit in last 5 months Agriculture Loan waived off

Reasons for high Fiscal deficit since October 2008 : 

Reasons for high Fiscal deficit since October 2008 Stimulus Packages Tax cuts Huge infrastructure expenditure Loan waive off 6th pay commission Decrease in tax revenues High defense expenditure

Slide 12: 

How Government monetize Deficit Financing Borrowing Divestment Sell sick Government undertakings External borrowing Borrowing denominated In local currency

Slide 13: 

Receipt and expenditure of central government Source: indiabudget.com

Slide 14: 

Measure to reduce Fiscal Deficit Tight expenditure control No further stimulus packages Removal of tax relaxation Divestment Increase PSU efficiency Strict following of FRBM act Replacing debt with innovative equity product Achieving higher economic growth

Thank you : 

Thank you