Govt likely to miss FY13 fiscal deficit target: Fitch arm

Moneycontrol Bureau

The government is likely to overshoot its fiscal deficit target of 5.3 percent for the current fiscal, feels Devendra Pant, Chief Economist, India Ratings & Research, part of the Fitch Group.

A government estimate pegged India's gross domestic product (GDP) to grow 5 percent in fiscal year 2012-13. This is the lowest of all growth projections issued by the government and the RBI.

"While the estimated investment rate in FY13 is likely to be similar to FY12, 80 basis point increase in share of consumption expenditure (private and government) would reduce savings rate further leading to further widening of current account deficit in FY13," said a note by Pant.

"The growth slowdown is reflective on the tax collection, which are growing at lower rate than the budgeted growth rates. The government has changed its fiscal deficit target to 5.3 percent in FY13 from budget estimate of 5.1 percent. Even after factoring in recent disinvestment proceeds, India Ratings expects, it will be difficult for government to limit its FY13 deficit to 5.3 percent," Pant said.