Exclusive: FY14 deficit likely to be lower than 4.8% target

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26 Aug, 2025 12:21

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Amid widespread concerns till only a month ago that the government would not be able to meet FY2013-14 fiscal deficit at its stated target of 4.8 percent of gross domestic product (GDP), it is now learnt that the deficit could come in lower, at 4.65 percent.

In last year’s budget, Finance Minister P Chidambaram had outlined the government would clock a deficit of Rs 5.42 trillion for the financial year, or 4.8 percent of GDP.

But overspending, coupled with lower-than-expected tax revenues, meant the government had already reached a shortfall of Rs 5.1 trillion (or 94 percent of the target) in the first eight months of the financial year.

Also read: Govt fund-raising gathers steam as deficit threshold nears

Sources have told CNBC-TV18 that full-year deficit is likely to come in lower as the government would make up for the shortfall in tax revenues with non-tax revenue sources.

Part of the shortfall would be made up with a string of divestments the government has recently initiated. Stake sales in Hindustan Zinc, Balco and Indian Oil, and special dividends by Coal India, SAIL and NMDC, among other public companies, have either been declared or are under process.

Till a month ago, the government had managed to raise only Rs 3,000 crore of its Rs 54,000 crore divestment target.

Throughout the last few months, the FM had repeatedly expressed confidence he would not cross the deficit “red line” of 4.8 percent of GDP even as rating agencies had warned a miss would likely be a credit-negative event for a country whose bonds are rated only a notch away from “junk” status.

The government has also cut its planned expenditure by Rs 1.10 trillion in FY14, or 20 percent of the total outlay, according to sources. Borrowing for the full year is now expected to come at Rs 5.64 trillion instead of the Rs 5.79 trillion declared in the budget.

The government recently deferred an auction of government securities scheduled on January 17, citing an improvement in its cash position.