In 2012-13 fiscal, the plan expenditure was reduced by over Rs 90,000 crore to Rs 4.29 lakh crore, from Rs 5.21 lakh crore estimated in budget. This helped to contain fiscal deficit at 4.9 percent of GDP.
The government is struggling to meet a 4.8 percent fiscal deficit target. The shortfall will only mean that more expenditure cuts. The disinvestment target is also far from being met and subsidies are likely to overshoot significantly.
India Ratings & Research (Ind-Ra) says the recent INR depreciation could increase oil subsidy by 0.1% to 0.4% of GDP in FY14 and this alone could push the fiscal deficit over 5.0% of GDP as against the budgeted 4.8%.
Accoding to sources in the finance ministry, there is enough leeway in the Budget to manage the Rs 40,000-50,000 crore fiscal deficit stress. The government may fetch Rs 25,000 crore from Hindustan Zinc, Bharat Aluminium Company (BALCO) stake sale instead of Rs 14,000 crore.
Fitch Ratings has revised India's outlook to stable from negative. Fitch's revision is based on the conviction that government has taken steps to contain fiscal deficit and would meet FY14 budget deficit target of 4.8 percent.
With the Budget session expected to resume shortly, the biggest worry from a market point of view is whether there would be any big bill, which results in a big increase in fiscal deficit, says S Naren, chief investment officer (equities), ICICI Prudential Asset Management Company.
Armed with the Budget proposals to bring down the fiscal deficit, the Finance Ministry will pitch for a ratings upgrade at series of meetings with the global agencies over the next few weeks beginning with Fitch from tomorrow.
Faced with intractable fiscal deficit situation, Finance Minister, in Union Budget 2013-14, has tried to pull out all the stops to bolster up revenue by plugging loopholes in taxation. However, this has resulted in some of most popular investments avenues losing their appeal. Read this space to know how it will impact investors.
Fiscal deficit for April-February stood at Rs 5.07 lakh crore, or 97.4 percent of the target for the current financial year. Finance Minister P Chidambaram had set a target for fiscal deficit for FY13 at 5.3 percent of GDP, and said in the Budget that the goal would be achieved.
The finance minister (FM) needs a booming stock market to yoke the fiscal deficit. A buoyant market will help the FM reach disinvestment target of Rs 56,000 crore, rather easily besides making it even more attractive for foreign institutional investors (FIIs).
The Finance Minister has tightened the screws on loose fiscal policy by delivering 5.2% fiscal deficit for FY13, and seen very confident on delivery of FY14 budget estimate of 4.8%: Moses Harding, IndusInd Bank.
Prashant Khemka of Goldman Sachs says the market seems to have lost its moment post Budget. Much was expected of finance minister P Chidambarams Union Budget 2013-14, which eventually turned out to be somewhat of a no show.