Delhi
have a tough time correcting its financial course from the current high level
of fiscal deficit, unless it decides to raise taxes or cut spending, said Prime
Minister's Economic Advisory Council (PMEAC) member Govinda Rao.
"Fiscal deficit will remain a
challenge in the coming years...and debt today is taxes tomorrow," Rao
said today at a seminar organised by Scope, a body of public sector units, on the
implications of the Union Budget 2010-11.
Fiscal deficit, which was to fall below 3
percent in 2008-09 as per the Fiscal Responsibility and Budget Management Act,
grew to 6.2 percent on high government expenditure and tax cuts undertaken to
soften the impact of the financial crisis.
The Budget for 2010-11 projected a fiscal
deficit of 6.7 percent for 2009-10 and 5.5 percent for the next fiscal.
Further, as per the rolling target, fiscal
deficit is to fall to 4.8 percent in 2011-12 and 4.1 percent in 2012-13.
"So, you will have to work it back ...
you need to either increase revenues or cut down expenditures. Then you will
have to decide which expenditures to cut and which taxes to raise. Now, isn't
that a challenge?" Rao said while talking to reporters.
The 13th Finance Commission has said the
overall debt to GDP ratio should be reduced to 68 per cent and for this the Commission
has suggested separate targets for the Centre and states.
"When you have to reduce your fiscal
deficit year by year, it's not an easy job," said Rao.
PTI
