The fiscal deficit of the government has increased to Rs 1,17,070 crore till October 2008. Its revenue is decreasing while spending is continuously increasing, causing heavy burden on the state exchequer. The fiscal deficit amounts to 88% of the targeted deficit estimated in the budget.

The governments spending in creating rural jobs, subsidies and raising of the wages of its employees has impacted the budget estimates. Lower tax collection also contributed to the increasing revenue deficits, which currently stands at Rs 87,027 crore at the end of October this year. The government is unlikely to achieve the desired target according to Fiscal Responsibility and Budgetary Management Act in the current fiscal. Union finance minister P Chidambaram, on Monday, said that it requires one more year to eliminate the revenue deficit and reduce the fiscal deficit below 3%. The revenue of state remained at Rs 2,89,400 crore during first seven months.

Taxes contributed Rs 2,32,396 crore in the overall revenue. The government got low amount from the loan recoveries and advances and had no cash inflow from selling the public sector enterprises. Total expenditure in the reporting period remained at Rs 4,08,395 crore, in which Rs 2,88,657 crore comes under non-plan head while Rs 1,19,738 crore comes under planned head.