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"As UID expands its coverage, the targeting of subsidies will improve considerab

Finance minister Pranab Mukherjee hopes to contain fiscal deficit through measures that address market distortions

Vishal Koul

Though you have set a fiscal deficit target of 5.1%, the worrying part is that the revenue deficit component will still be around 3.5% (4.4% previous revised Budget estimate). Will this not crowd out private investment? 

One of the reasons for revenue deficit stickiness in recent years has been the growing transfers to state governments and other developmental expenditure, conventionally classified as revenue expenditure, even though a considerable part of the expenditure from these transfers is in the nature of capital expenditure. If we net out grants for capital expenditure from the revenue deficit, the effective revenue deficit is only 1.8% of the GDP for


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