Despite its commitment to meet the target for 2013-14,the Centres fiscal health deteriorated further in November with the fiscal deficit shooting to 93.9 per cent of the Budget Estimate (BE) as tax collections and disinvestment proceeds fell short of target.
Even more worryingly,both the revenue and primary deficits has exceeded the Budget projections at 103.5 per cent and 171.8 per cent of the BE respectively between April and November 2013.
Data released by the Controller General of Accounts revealed that the the Centres fiscal deficit stood at Rs 5,09,557 crore or 93.9 per cent of the BE of Rs 5,42,499 crore between April and November. It was significantly lower at Rs 4,12,926 crore a year ago.
Finance minister P Chidambaram has called the target of 4.8 per cent,a red line that will not be breached. The target is also being monitored by global rating agencies who have warned that any fiscal slippage could lead to a rating downgrade for India.
Fiscal consolidation in the past has been driven by growth in revenue but this year,revenue receipts are not as plentiful. We expect the fiscal deficit at 5.1 to 5.2 per cent in 2013-14 but this could be lower depending on the quantum of expenditure compression by the government, said DK Pant,chief economist at India Ratings. But flagging tax receipts that amounted to Rs 3,96,166 crore or just 45 per cent of the BE of Rs 8,84,078 crore could pose a challenge. Finance ministry officials said that indirect tax collections may fall short of target by Rs 41,000 crore. But an improvement is expected in direct tax receipts in December with advance tax payments.