Higher growth, tight expenditure control and divestment receipts of over Rs 15,000 crore (Rs 150 billion) will help the government achieve a fiscal deficit less than the 5.6 per cent targeted in 2003-04 despite last week's tax giveaways.

Finance Minister Jaswant Singh has said the pundits will be pleasantly surprised about the state of the fisc when he presents the interim Budget.

His officials say expenditure will be lower despite the sharp rise in food and petroleum subsidies. And tax collection, apart from excise, might even exceed the Budget estimates.

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Add to those divestment receipts, which for the first time will cross the Budget estimate of Rs 13,200 crore (Rs 132 billion). The government has realised Rs 1,335 crore (Rs 13.35 billion) so far this fiscal.

The public offer of government stakes in ONGC, Gail and Dredging Corporation and the sale of its residual equity in CMC, IBP and IPCL among others should bring home a record amount this year.

The other big factor is GDP growth, set to top 7 per cent in 2003-04. The economy grew 8.4 per cent in the second quarter of 2003-04 and the momentum is expected to continue over the next two quarters.

The Budget for 2003-04 had assumed a GDP growth rate of 6.5 per cent with annual inflation at 5 per cent to arrive at the 5.6 per cent fiscal deficit estimate. The higher growth rate, at the same rate of inflation, will, the government estimates, shave 5 basis points off the deficit.

All this could see the fiscal deficit at 5.4 per cent or less, finance ministry officials pointed out.

Revenue Secretary Vineeta Rai has doubts only on the excise front, where the government faces a shortfall of about Rs 5,000 crore (Rs 50 billion).

Add last week's Rs 2,500 crore (Rs 25 billion) duty cuts and the shortfall could top Rs 7,500 crore (Rs 75 billion) this fiscal. But officials said this would be bridged partially by a buoyant corporate tax collection.

According to the officials, the net direct tax collection during April-December 2003 at Rs 95,569 crore (Rs 955.69 billion) was 27.4 per cent higher than the figure for the corresponding period of the previous year.

This is significantly higher than the budgeted rise of 17.61 per cent. Corporate tax collection during the period jumped 40 per cent over the same period of last year.

The officials said the ministry's cash management experiment on nine high-spend demands was bearing fruit this year.

North Block is simultaneously keeping a strict vigil on the spending pattern of various ministries and is discouraging expenditure bunching in the January-March quarter.

Defence might not yield substantial savings as it does most years, and the subsidy bill is likely to overshoot the target. But there could be a matching saving in Plan expenditure

Springing a fiscal surprise

• Selloff mop-up to top Rs 15,000 crore, 14% more than target.
• 7%-plus growth may numerically mean a lower fiscal deficit as a percentage of GDP.
• Tight leash on expenditure, Plan spend likely to see savings .
• Buoyant corporate collections to more than compensate shortfall in excise.