InvestorQ : Is it true that the fiscal deficit could over shoot in this year for India?
diksha shah made post

Is it true that the fiscal deficit could over shoot in this year for India?

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2 months ago
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That is a real problem for India in this year. In fact, India’s fiscal deficit for the first half of the fiscal ending Sep-20 has breached 115% of the full year target. Yes, we are talking about breaching the full-year target in just 6 months and more.

Look at the numbers. Against the full year target of Rs.7,92,000 crore, the government fiscal deficit had already crossed Rs.9,13,000 crore by the end of September, with 6 months more to go. Also revenues on the tax front are yet to show a strong pick up in line with GDP.

With six more months to go, it looks very likely that the amalgam of weak revenues and higher spending will most likely take the central fiscal deficit closer to 7% of GDP against the budgeted target of 3.5%. We are not even counting the state fiscal deficits here.

Higher fiscal deficit means higher borrowings for the government and that could put pressure on the interest rate yields in the economy. This is not unique to India as all economies are trying to push growth through what is called pump priming.

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