Sum's take on India's Fiscal Deficit Numbers

What does Reddy meant when he said Though the Centre's fiscal situation is improving, I think there are underlying fiscal pressures not evident in the numbers"

Well he actually meant a lot, athough India's fiscal deficit is estimated at 2.5 % of the GDP in 2008-09 as againt 3.1 % in the previous fiscal. If we take clever play of exclusions in these numbers an approx of Rs.75000 crore of farrm loan waver and six pay commission is excluded, so is the fertilizer subsidy of Rs.50,000 crore and oil subsidy bill of Rs.200,000 crores. Has these numbers been accounted for by PC the actual fiscal deficit would be two or three times the estimates. Also the decrease in Fiscal Deficit as compared to last year in on account of low public investment by the Government. With wooping oil and fertilizer bonds being issued by GOI the entire economy is placed on a time bomb like situation. Almost half of house hold saving is being consumed by actual fiscal deficit (and not estimsted.) These deficit numbers will be a big challenge for the next government as the numbers are already the highest in the world. Coupled with high inflation numbers and high fiscal deficit "The Economist" has rightly places India in the list of three most vulnerable developing economies of the world.