Chennai, (IANS) India’s fiscal deficit this financial year will exceed the projected 4.6 percent of the gross domestic product (GDP) owing to higher oil prices, Finance Minister Pranab Mukherjee said Friday.
The 2011-12 budget had projected the country’s fiscal deficit at 4.6 per cent of the GDP. Fiscal deficit is the difference between total expenditure and total revenue.
“Volatality in fuel prices affected the short and medium term projections. We have to depend on imported crude. India annually imports around 110 million tonnes of crude oil. We had projected the crude price to be around $90 per barrel. However, it did not come down form $107 a barrel,” Mukherjee said, inaugurating an international conference organised by the Institute of Chartered Accountants of India (ICAI) here.
“It was not possible to pass on the cost and it impacted the budget,” he added.
Mukherjee said the deteriorating global conditions due to the European debt crisis also impacted the economy. However, India, he said, is on a better footing as its savings and investment rates are around 35 and 36 percent of the GDP respectively.
He said with a huge number of technically competent professionals, besides 60 percent of its population being young, India will come back to a strong growth trajectory by 2020.
“With these strong fundamentals, I have no doubt that we will overcome the shortcomings and come back to the path of higher growth trajectory.”
Also, Mukherjee said, the government will rewrite its economic legislations to meet the needs of the emerging situation.
According to him, the Direct Tax Code and the Goods and Services Tax would eliminate the distortions in tax laws and streamline the tax administration in the country.
The finance minister asked the accounting professionals to focus on transparency in accounting.
“Transparency in accounting is important for combating corruption. It is expected of the accountancy profession to act in the interest of the public and decisively,” said Mukherjee.
Speaking at the function, Union Corporate Affairs Minister M. Veerappa Moily said the challenge before to the country is transparency and accountability.
He said the government will come out with a national competition policy this year and is looking at formulating a national corporate governance policy.