The Reserve Bank of India [Get Quote] on Tuesday warned the government against the deteriorating fiscal position due to growing off-budget liabilities, expenditure on subsidies, loan waiver and possible implementation of the 6th Pay Commission recommendations during the year.

"Early fiscal indicators point to some strains on the Centre's fiscal position which has worsened somewhat in relation to budget estimates," said the Reserve Bank of India in its quarterly monetary review released in Mumbai.

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According to budget estimates, the revenue deficit is estimated at Rs 55,184 crore (Rs 551.84 billion) this fiscal, which amounts to 1.0 per cent of GDP, while fiscal deficit is estimated to touch Rs 133,287 crore (Rs 1,332.87 billion), 2.5 per cent of GDP.

RBI noted that in view of the growing off-budget liabilities and enhanced expenditures on subsidies, loan waivers and salaries in the rest of the year, fiscal deficit may go up.

Consequently, fiscal developments warranted 'close and careful monitoring' as it would have implications on inflation and external sector management, the report said.

Referring to rise in international prices of food, crude oil and other commodities, the central bank said it had resulted in a sizeable expansion in the merchandise trade deficit and downward pressures in the foreign exchange market.

With the spurt in international crude oil prices, India's oil import bill is expected to touch $120 billion in 2008-09 against $69 billion in the last fiscal.

Earlier, the government said it would issue oil bonds amouting to about Rs 94,000 crore (Rs 940 billion) to offset losses of oil marketing companies for selling subsidised petroleum products.

Meanwhile, the government's subsidy bill for fertilisers, food and loan waiver could cross Rs 1,00,000 crore (Rs 1,000 billion) this fiscal.