Budget 2014: Jaitley May Revise Fiscal Deficit Target Upwards, Says Report
Finance Minister Arun Jaitley may revise upwards fiscal deficit target for 2014-15 to 4.42 per cent up from 4.1 per cent projected in the interim budget, according to a report by State Bank of India's Economic Research Department.
"We can have a higher deficit number, possibly at 4.42 per cent without disturbing the borrowing estimates pegged at Rs 5.29 lakh crore in the interim budget as we believe the government can mobilise a significant amount of revenue through disinvestment given the current buoyant market conditions," the report authored by SBI chief economic adviser Soumya Kanti Ghosh said on Tuesday.
Mr Jaitley will present his maiden budget on July 10.
The report further said the good thing is that as per government estimates, it is carrying forward sizeable cash balance (Rs 1.04 lakh crore or 0.8 per cent of GDP) into this fiscal year, a part of which may be used for redeeming government bonds without taking a recourse to higher market borrowings.
On the expenditure side, a bulge in capital expenditure is possible, even as it is unlikely that spending on subsidies pegged at 1.92 per cent of GDP in the interim budget may be revised downwards significantly, the report said.
Tax receipts are likely to grow at around 16.4 per cent down from 19 per cent projected in the interim budget.
"Our optimised nominal GDP projection for this fiscal is at 12.5 per cent, taking de facto the fiscal multipliers into consideration. This translates into a real GDP growth of around 5.5 per cent and inflation at 7 per cent," the report said.
