The government will be able to keep its fiscal deficit lower at 5.4 per cent during 2003-04 than the budgeted 5.6 per cent of GDP, despite the give-aways announced by Finance Minister Jaswant Singh on January 8, according to rating agency ICRA.

The Mini-Budget 2004-05

"Tax sops are likely to result in indirect revenue loss of Rs 2,500 crore (Rs 25 billion) to the exchequer," ICRA said in a report.

However, it said: "The estimated revenue loss is unlikely to have any major impact on fiscal deficit, as the projected GDP growth of 7 per cent will far outstrip prospects of such loss."

Even after taking into account the tax sops, ICRA estimates the revised fiscal deficit at Rs 1,47,139 crore (Rs 1,471.39 billion) or 5.4 per cent of GDP compared to the budgeted Rs 1,53,677 crore (Rs 1,536.77 billion) [5.6 per cent of GDP].

The total spending of the government is slated to be higher in the election year at Rs 4,50,000 crore (Rs 4,500 billion) compared to the budget estimate of Rs 4,38,795 crore (Rs 4,387.95 billion), it said.

Revenue receipts are slated to be lower at Rs 2,47,861 crore (Rs 2,478.61 billion) as against the budget target of Rs 2,53,935 crore (Rs 2,539.35 billion) with tax revenue falling short of target by about Rs 6,000 crore (Rs 60 billion).

"The growth rate of tax collection was 12.7 per cent, marginally higher than the budgeted 12.2 per cent. Given the optimistic growth projections, the direct tax collection in FY04 may be close to the budget estimates," ICRA said.

Net tax revenue is slated to be at Rs 1,78,095 crore (Rs 1,780.95 billion) compared to the budget estimate of Rs 1,84,169 crore (Rs 1,841.69 billion), it added.