Government breaches FY19 deficit target

NEW DELHI: The full-year fiscal deficit target of Rs 6.2 lakh crore was breached by October-end mainly on account of lower revenue collections, showed government data on Friday, reflecting deterioration in public finances. The fiscal deficit was Rs 6.5 lakh crore or 104% of the Budget Estimate (BE) during April-October of the current financial year. At the end of October 2017-18, the deficit was 96% of the BE.

Government officials said that the Centre was on course to meet the 3.3% fiscal deficit target for the current fiscal year as more tax revenues will flow in the second half of the year. “Typically, expenditure is front loaded while revenues come in during the later part of the year,” said a senior official, who did not wish to be named.

Economists said they expect fears of a fiscal slippage to accelerate. “Fears of a fiscal slippage in FY19 may intensify following the sharp 23.5% year-on-year (YoY) rise in the fiscal deficit of the government in April-October FY19, which crossed the Budget Estimate for the full year, despite the relief offered by the recent correction in crude oil price,” said Aditi Nayar, principal economist at ratings agency Icra.

“Notwithstanding fears of a potential fiscal slippage in FY19, the announcement of OMO purchases by the RBI in December 2018 and the decline in crude oil prices would keep a check on G-sec yields in the immediate term,” she said.