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  • Lower plan expenditure helps government compress budget gap

    A sharp fall in plan expenditure has helped pull India's fiscal deficit for last financial year below the government's estimate, but the cut in spending on productive activities has left an impact on the economy.

    The deficit, or the shortfall in the government's revenue to meet expenses, narrowed to 4.5% of gross domestic product in the year ended on March 31, compared with 4.9% initially estimated in the 2013-14 budget and the revised 4.6% given out with the interim budget for 2014-15 in February.

    Plan expenditure, which is associated with productive expenditure, fell to Rs 4.53 lakh crore, according to provisional data released on Friday, from Rs 4.76 lakh crore envisaged in the estimates presented with the interim budget. This implies a reduction of more than Rs 1 lakh crore in plan spending budgeted for 2013-14.

    The nation's economic growth remained below 5% for the second straight year, as GDP expanded just 4.7% in 2013-14, better than the previous year's 4.5% growth, but below the most recent government estimate of 4.9%, data showed Friday.

    Sluggish manufacturing sector growth dented tax mobilisation with tax receipts coming in lower at Rs 8.16 lakh crore compared with the downwardly revised estimate of Rs 8.36 lakh crore. Non-tax revenue, largely in the form of dividends from public sector units, provided some help - at Rs 1.99 lakh crore, it exceeded the February budget estimate of Rs 1.93 lakh crore.
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