Setting a new timeline for consolidation, the finance ministry has projected that it will be able to wipe out revenue deficit and rein in fiscal deficit at 3 per cent of the gross domestic product only by 2014-15. The estimates bank significantly on the economy staging a smart recovery the next financial year and handsome gains from non-tax receipts such as disinvestment and auction of natural resources such as telecom spectrum.

According to government officials, the projections may form part of a new Fiscal Reforms Legislation that the Vijay Kelkar-chaired Thirteenth Finance Commission (TFC) will provide inputs for. The new targets will be concomitant to the award of the TFC that is likely to submit its report before December end this year. The TFC award will be applicable for five years beginning 2010-11.

Officials said as of now there was no clear strategy for any meaningful pruning of subsidies that form part of the non-Plan expenditure, which anyway is sticky. The other two meaty components of non-Plan expenditure are interest outgo and defence spend. Besides, the finance ministry expects petroleum and fertiliser products to remain soft, to suggest the subsidy regime would continue.

The global economic crisis and consequent powering down of the Indian economy had forced the government to announce a series of stimulus measures. The fiscal stimulus provided to mitigate the impact of the crisis amounted to about Rs 1,86,000 crore or about 3.5 per cent of the GDP. This resulted in fiscal deficit shooting up to 6.8 per cent as estimated in Budget 2009-10.

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