Meeting the fiscal deficit target of 3.3 per cent of GDP for the current fiscal could be a challenge for the government, given the shortfall in GST collections, rising expenditure and slowing factory output, say experts.
Moreover, some populist announcements by the government to woo voters ahead of general elections would make the task of achieving the fiscal deficit target even more daunting.
Some of the experts have already projected that the fiscal deficit could rise to 3.5 per cent of the GDP, more than the budget estimate of 3.3 per cent of the GDP for the current fiscal.
The government's fiscal deficit touched 114.8 per cent of the full-year estimates at the end of November.
The government had budgeted fiscal deficit of Rs 6.24 lakh crore, or 3.3 per cent of the GDP, for FY19. Fiscal deficit for April-November stood at Rs 7.16 lakh crore, or 114.8 per cent of the target. It is slightly more than the 112 per cent recorded in the same period last fiscal.
The pressure on government finances is mainly arising from indirect taxes and non-tax revenue side - particularly disinvestment.
"As a result of revenue shortfalls from GST collections, lower excise duty and below target disinvestment receipts, we expect the central government fiscal deficit target to slip to about 3.4 per cent of GDP.
"Increased expenditure on subsidies or income transfers to farmers would make achieving the budgeted fiscal deficit target even more challenging, particularly given these revenue constraints," Moody's Investors Service Vice President, Sovereign Risk Group William Foster told
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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