DBS sees govt missing FY14 fiscal deficit target

The government is likely to overshoot its FY14 fiscal deficit estimate by 0.2-0.3 per cent to 4.8- 4.9 per cent as tax revenues have not been up to expectations, DBS today said.

"The (Indian) government had estimated that last year's fiscal deficit was contained at 4.6 per cent, lower than the 4.8 per cent goal. However, the trends between April 2013 and February 2014 belie that optimism," the Singaporean brokerage firm said in a note.

"The final deficit could be adjusted higher when the numbers are available in late May," it said.

DBS said that during the first 11 months of the 2013-14 fiscal ended on March 31, only 76 per cent of the tax revenue collection target could be achieved, while on the expenditure front, the same number stood at 88 per cent.

The final fiscal deficit figure would move up to 4.8-4.9 per cent, it said, adding it is a "conservative estimate" going by way in which the tax and revenues have performed.

Since 2012-13, Finance Minister P Chidambaram has been forced to take the fiscal consolidation target very seriously, driven majorly by global agencies' threats of a downgrade in India's credit rating.

DBS, however, said the markets may not react adversely to any upward revision after the release of final figures as by that time they will be focusing on the new government's fiscal priorities.

The first of new government will be a litmus test, it said, suggesting that the government should go in for a more realistic target, which may be around 0.2-0.3 per cent more than the number of 4.1 per cent defined in the interim Budget in February.

It said: "The rating agencies and the markets, however, will tolerate the marginal increase in the target, provided the government factors in realistic assumptions and appears serious in its intent to adhere to targets."

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Signalling good times, current account deficit is likely to grow from here on

    The current account deficit (CAD) numbers for April-June quarter declined sharply to 1.7 per cent of GDP.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Disruptive innovation in education

The past two weeks had a fair share of interesting ...

Rajgopal Nidamboor

Regain the spirit of focused power

For aeons, the human race has been experimenting with a ...

Gautam Gupta

Manufacturing must keep workers’ welfare in mind

It may be early days yet, but the labour reforms ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture