Acuité expects the government to stick to the revised fiscal deficit target of 6.9% of GDP in FY22

India's central government fiscal deficit for the period Apr-Feb stood at 82.7% of revised estimates (RE) for FY22 compared to 77.2% of actuals in the corresponding period of FY21. The sharp rise in the fiscal deficit can be attributable to the disinvestment target which has fallen significantly short of expectation amidst deferment of LIP IPO. Taking into consideration the revised fiscal deficit target, the government has a fiscal deficit leeway to the tune of Rs 2745 bn for the remaining one month.

Acuité is pleased to share with you the fifteenth edition (Mar-22) of Acuité Macro Pulse, which also marks the end of the previous financial year. This monthly publication on the state of the economy is not only a comprehensive commentary on a wide spectrum of macroeconomic indicators, but it also endeavours to capture the interlinkages and draw insights on the emerging economic landscape.

Key takeaways from Government Finance:

1. Although the central government projected a minor slippage of 0.1% of GDP in FY22 (with RE of fiscal deficit getting re-pegged at 6.9% of GDP vis-à-vis the initial budget estimate of 6.8%), incoming signals indicate a mixed fiscal position.

2. While anticipation of a positive surprise in tax collection and favorable denominator support from upward revision to FY22 Nominal GDP are supportive, the deferment of LIC IPO to FY23 would create a shortfall in budgeted receipts for FY22.

3. Acuité expects the risks to broadly offset each other helping the government to stick to the revised fiscal deficit target of 6.9% of GDP in FY22.

Link to the report

Source : Equity Bulls

Keywords

AcuiteRatings FiscalDeficit GDP Economy