A whopping 29 per cent growth in the Centre's fiscal deficit to Rs 1,55,833 crore (Rs 1558.33 billion) or 6.8 per cent of GDP in 2001-02 has made the Comptroller and Auditor General sceptical of the long term target of two per cent by 2006.

"The continuous increase in fiscal deficit along with an increasing ratio of revenue deficit is in sharp contrast to the long-term target of complete elimination of revenue deficit and reduction of fiscal deficit GDP ratio to two per cent by March 2006, as enunciated in the draft Fiscal Responsibility and Management Bill, 2000," the CAG report said.

The fiscal deficit (which was 6.80 per cent of GDP) in 2001-02 rose from Rs 1,20,874 crore (Rs 1208.74 billion) (which was 5.79 per cent of GDP) in 2000-01, while revenue deficit rose by 27.35 per cent to Rs 1,10,303 crore (Rs 1103.03 billion) in 2001-02 as compared to Rs 86,611 crore (Rs 866.11 billion) in the pervious year.

"Finances become vulnerable to the extent that fiscal deficit was not used for creating assets, as there was no addition to the repayment capacity due to lack of asset back up for the liabilities incurred," the report said.

The report, however, said the ratio of fiscal deficit to GDP showed a decelerating trend over the plans as it declined from an average of 8.19 per cent of GDP during 185-90 (seventh plan) to an average 6.27 per cent during 1997-2002 (IX plan).

On the revenue deficit, "the most undesirable" in view of its adverse impact on capital formation by the Government, it said, "there was further deterioration of the revenue deficit in 2001-02 and reached a level of 4.81 per cent of GDP and accounted for 29.37 per cent of revenue expenditure."