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I-Sec study pegs fiscal deficit at 6.5 pc of GDP

Shortfall in indirect tax collections coupled with the current slow pace of public sector disinvestment are likely to push the fiscal deficit to about 6.5 per cent of the gross domestic product in the current year.

According to the latest debt market update of ICICI Securities and Finance Company or I-Sec, fiscal slippage is likely to be about Rs 150 billion and a large portion of it would have to be funded by market borrowings. This appears set to overshoot the targeted Rs 910.25 billion (5.6 per cent of GDP).

With equity market continuing to be sluggish, only Rs 2.25 billion has been raised through disinvestment in Container Corporation of India or Concor as against the budgeted Rs 50 billion for the fiscal year.

Last year, the fiscal deficit exceeded the target by Rs 208.91 billion and this was funded mainly through excess small savings collections and additional market borrowings.

This year, with higher amount budgeted for small savings, there is little leeway from this segment and most of the fiscal slippage would need to be funded from additional market borrowings.

UNI

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