April-November Fiscal Deficit Hits 115% Of Full-Year Target

The government risks missing its budget deficit target for the current fiscal year, data released on Thursday suggested, and economists said the government had already started to cut capital spending in an attempt to narrow the gap. The data showed the fiscal deficit in the April-November period stood at Rs 7.17 lakh crore ($101.93 billion), or 114.8 per cent of the budgeted target for the fiscal year that ends in March.

It is the second consecutive month that the deficit has come in above 100 per cent of the budgeted target. In the April-October period India reported a fiscal deficit of Rs 6.49 lakh crore, or 103.9 per cent of the budgeted full-year target.

The government has set a fiscal deficit target of 3.3 per cent of gross domestic product for the current fiscal year.

Net tax receipts in the April-November period were Rs 7.32 lakh crore, against a full-year target of Rs 14.81 lakh crore, while total spending stood at Rs 16.13 lakh crore, against the full-year target of Rs 24.42 lakh crore.

"There are several risks to meeting the budgeted targets for revenues and expenditures, with one of the predominant concerns arising from a possible shortfall in indirect tax collections," said Aditi Nayar, principal economist at ratings agency ICRA.

Ms Nayar said 93 per cent of the budget estimate for fuel subsidies had been released in the April-November period and that the government might need more funds for fuel subsidies in the coming months.

The government also reported April-November capital expenditure - for use in construction of roads, improved railways and the creation of other physical assets - of Rs 1.91 lakh crore, which is 63.8 per cent of the full-year target.

One economist said the government had started cutting capital spending for the year to counter the fiscal deficit slippage.

"It appears course correction has already begun and the axe has fallen on capex. Monthly average capex in October-November is 46 per cent lower than the monthly average in the April-September period," said Devendra Pant, chief economist at India Ratings.

The government also faces the risk of missing its divestment target from the sale of state assets as it has garnered less than half of the Rs 80,000 crore target set for the year.