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Arun Jaitley grapples with Chidambaram legacy

New Delhi, July 3 (): Chidambaram legacy left for Arun Jaitley the Union Finance Minister is to grapple with the unrealistic fiscal deficit, as he goes about the delicate balancing act of preparing his maiden Budget.

With the fiscal deficit in the two months of April and May of the current FY 2014- 15 already touching 45.6 per cent mark of the estimate for the entire year as envisaged by Chidambaram , it is evident that the target cannot be met.

The fiscal deficit which is the gap between revenue and expenditure for the whole year has been put at a mere 4.1 % of GDP or Rs 5.28 lakh crore in the interim Budget. April and May saw the figures jump to Rs 2.4 lakh crore.

Analysts say that a higher deficit number, possibly pegged at 4.42 per cent (of GDP) will not disturb the borrowing estimates.

Through certain measures, Chidambaram had reduced the fiscal deficit to 4.5 % or to Rs 5,08,149 crore in 2013-14 . It was 4.9 per cent in the previous year. He had slashed public investment by Rs 80,000 crore and increased the outlay on subsidies and pushed the subsidy of Rs 35,000 crore on petroleum products onto the next government.

Chidambaram had drawn flak from opposition for drastically slashing expenditure on public investment schemes that stunted the economic growth rate. A more bolder Chidambaram had set the fiscal deficit target at 4.1% for 2014-15, which official statistics released show is not achievable.

Chidambaram’s move to bring down the fiscal deficit in the interim budget was on the calculation that personal income tax would go up by 27% and corporate tax by 15%. CAG figures show that Rs 38,505 crores was collected in April and May. A burden of Rs 2,46,397 crore for food, fertilizer and fuel subsidies and the interest moratorium on student education loan is around Rs 2,600 crore. The good news is that private sector grew by 17% in June with more orders and increase in manufacturing.

(With inputs from dailymail.co.uk)