Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

New Delhi, India's <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword> in the current financial year is likely to reach 7.4% of the <keyword id="35050" type="CITY" weightage="20" keywordseo="gdp">GDP</keyword> on the back of enhanced government <keyword id="53105" type="PERSON" weightage="20" keywordseo="Expenditure">expenditure</keyword> amid the pandemic, said the <keyword id="13222" type="DOMAIN" weightage="20" keywordseo="SBI">SBI</keyword> Ecowrap report. The report noted that as per the first advanced estimate of the GDP, real GDP will contract by 7.7% in <keyword id="7822862" type="LOCATION" weightage="20" keywordseo="FY21">FY21</keyword>, and nominal GDP growth is expected at (-) 4.2%. Accordingly, the nominal GDP for <keyword id="5027223" type="COMPANY" weightage="20" keywordseo="FY22">FY22</keyword> would grow by 15% to ₹224.04 lakh crore. "Current trends in the GDP for FY21 will translate into ₹3.2 lakh crore net revenue shortfall for the <keyword id="6356303" type="COMPANY" weightage="20" keywordseo="Centre">Centre</keyword> this fiscal and at the same time, expenditure is higher by around ₹3.3 lakh crore, thus taking the fiscal deficit to ₹14.46 lakh crore and with new revised nominal GDP estimate for FY21, it will be around 7.4% of GDP," it said. For FY22, assuming the government keeps the expenditure growth at 6% over FY21 estimates and overall receipts, excluding borrowing and other liabilities, expected at 25%, it would result in fiscal deficit of around ₹11.67 lakh crore or 5.2% of GDP. The net market borrowing of the Centre will be around ₹8.8 lakh crore and with repayments of ₹2.7 lakh crore, gross borrowings are expected at ₹11.5 lakh crore, according to the report. "With states' gross borrowing around ₹9.4 lakh crore, total gross market borrowing would be around ₹20.9 lakh crore, but could have a clear downward bias," it said. SEE ALSO: <a href="https://www.businessinsider.in/tech/apps/how-to/how-to-backup-and-restore-messages-in-signal-app/articleshow/80226649.cms">How to backup and restore messages in Signal app</a> <a href="https://www.businessinsider.in/tech/apps/news/whatsapp-says-your-privacy-wont-be-affected-if-you-dont-use-these-features/articleshow/80225748.cms">WhatsApp says your privacy won't be affected if you don't use these two optional features</a> <a href="https://www.businessinsider.in/india/news/supreme-court-puts-indias-three-farm-laws-on-hold-forms-a-five-member-panel-to-resolve-the-deadlock/articleshow/80229881.cms">India's top court puts three new farm laws on hold — forms a five-member panel to resolve the deadlock</a>

SBI pegs India's fiscal deficit at 7.4% of GDP

The central government's <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword> stood at Rs 1.23 <keyword id="4049201" type="PERSON" weightage="20" keywordseo="lakh-crore">lakh crore</keyword> or 8.2 per cent of the full year's Budget Estimate at end-May 2021, as per the data released by the <keyword id="513373" type="COMPANY" weightage="20" keywordseo="Controller-General-of-Accounts">Controller General of Accounts</keyword> (CGA). The fiscal <keyword id="6420764" type="UNKNOWN" weightage="20" keywordseo="deficit">deficit</keyword> at the end of May 2020 was 58.6 per cent of the Budget Estimates (BE) of 2020-21. In absolute terms, the fiscal deficit was Rs 1,23,174 crore at end-May 2021. The government expects the fiscal deficit for 2021-2022 at 6.8 per cent of GDP or Rs 15,06,812 crore. The fiscal deficit or the gap between <keyword id="53105" type="PERSON" weightage="20" keywordseo="Expenditure">expenditure</keyword> and revenue for 2020-21 was 9.3 per cent of the gross domestic product (GDP), an improvement over 9.5 per cent projected in the revised estimates in the budget in February. As per the CGA data, the <keyword id="6356303" type="COMPANY" weightage="20" keywordseo="Centre">Centre</keyword> received Rs 3,54,787 crore (17.95 per cent of corresponding BE 2021-22 of total receipts) for May 2021. This comprised Rs 2.33 lakh crore tax revenue (net to Centre), Rs 1.16 lakh crore of non tax revenue and Rs 4,810 crore of non debt capital receipts. Non debt capital receipts consist of recovery of loans Rs 815 crore and disinvestment proceeds of Rs 3,995 crore. The total receipts were 2 per cent of the BE in the corresponding period last fiscal. It further said Rs 78,349 crore was transferred to state governments as devolution of share of taxes by government of <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword> up to May, which is Rs 13,728 crore lower than the previous year. Total expenditure incurred by the Centre was Rs 4,77,961 crore (13.72 per cent BE), out of which Rs 4.15 lakh crore was on revenue account and Rs 62,961 crore on capital account. Out of the total revenue expenditure, Rs 88,573 crore was towards interest payments and Rs 62,664 crore on account of major subsidies. See also- <a href="https://www.businessinsider.in/tech/apps/news/one-year-of-chinese-apps-ban-indian-alternatives-take-over-tiktok/articleshow/83943865.cms" data-type="tilCustomLink">One year of Chinese apps ban — Indian alternatives take over TikTok</a> <a href="https://www.businessinsider.in/cryptocurrency/news/chinas-oldest-crypto-exchange-exits-cryptocurrency-business-amid-government-crackdown-on-bitcoin-mining/articleshow/83953113.cms" data-type="tilCustomLink">China's oldest crypto exchange exits cryptocurrency business amid government crackdown on Bitcoin mining</a>

Indian government's spending and income gap in May stands at 8.2% of annual target

New Delhi, The <keyword id="6357801" type="COMPANY" weightage="20" keywordseo="union">Union</keyword> <keyword id="26362" type="ORGANIZATION" weightage="20" keywordseo="Government">government</keyword>'s fiscal deficit soared to ₹10.75 lakh crore, or 135.1% of the 2020-21 Budget Estimates (BE), at the end of November 2020, mainly on account of low realisation of revenue due to disruption in business activities amid the coronavirus pandemic. The fiscal deficit at the end of November 2019 had stood at 114.8% of 2019-20 BE. In absolute terms, the fiscal deficit stood at ₹10,75,507 crore at the end of November 2020, according to the latest data released by the <keyword id="513373" type="COMPANY" weightage="20" keywordseo="Controller-General-of-Accounts">Controller General of Accounts</keyword> (CGA). The lockdown imposed to curb the spread of coronavirus had significantly impacted business activities and, in turn, contributed to sluggish revenue realisation. The fiscal defict, or gap between the expenditure and revenue, had breached the annual target in July this year. The government's total receipts stood at ₹8,30,851 crore (37% of BE 2020-21) till the end of November 2020. This included ₹6,88,430 crore tax revenue (net to centre), ₹1,24,280 crore of non-tax revenue and Rs 18,141 crore of non-debt capital receipts. Non-debt capital receipts consist of recovery of loans and disinvestment proceeds. The tax revenue collection was 42.1% of BE of 2020-21, compared with 45.5% of BE (2019-20) during the corresponding period a year ago. Non-tax revenue was 32.3% of BE. During the corresponding period of the last fiscal, it was 74.3% of BE 2019-20. During the corresponding period last fiscal, the total receipts were 48.6% of 2019-20 BE. According to the data, over ₹3.34 lakh crore were transferred to state governments as devolution of share of taxes by the <keyword id="6377129" type="COMPANY" weightage="20" keywordseo="government-of-india">Government of India</keyword> up to November 2020. The CGA data said the total expenditure incurred by the government stood at ₹19,06,358 crore or 63% of BE. Of the total expenditure, ₹16,65,200 crore was on revenue account and ₹2,41,158 crore on capital account. It further said that out of the total revenue expenditure, over ₹3.83 lakh crore was on account of interest payments and ₹2,02,119 crore towards major subsidies. For this financial year, the government had pegged the fiscal deficit at ₹7.96 lakh crore or 3.5% of the GDP in the <keyword id="6360189" type="COMPANY" weightage="20" keywordseo="union-budget">Union Budget</keyword>, which was presented by <keyword id="25455" type="COMPANY" weightage="20" keywordseo="finance">Finance</keyword> Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> in February 2020. These figures, however, may have to be revised significantly in view of the economic disruptions created by the coronavirus pandemic. Fiscal deficit had soared to seven-year high of 4.6% of the gross domestic product in 2019-20, mainly due to poor revenue realisation. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-tata-steel-vedanta-adani-green-tata-motors-maruti-mm-dhfl-v-mart-indian-bank-and-others/articleshow/80038635.cms">Top stocks to watch — Tata Steel, Vedanta, Adani Green, Tata Motors, Maruti, M&amp;M, DHFL, V-Mart, Indian Bank, and others</a> <a href="https://www.businessinsider.in/tech/mobile/news/checkout-the-list-of-upcoming-new-mobiles-in-january-2021-with-expected-price/articleshow/80039794.cms">Upcoming smartphones in India in January 2021</a> <a href="https://www.businessinsider.in/international/news/ten-of-the-most-outrageous-predictions-for-2021-according-to-saxo-bank/slidelist/80040045.cms">From Amazon buying Cyprus to Germany bailing out France — here are ten of the most ‘outrageous’ predictions for 2021</a>

India's fiscal deficit is more than double its FY21 target

Indian markets looked very tentative on the first trading day after budget 2019 was announced. The recovery in the last hour of trade helped the Sensex and the Nifty close with gains, but the momentum came largely from the rebound in Reliance Industries in late trade. The gains in India's stock markets are underwhelming given the fact that global risk appetite has improved and Asian peers are near a four-month high. Companies that would benefit from higher demand, thanks to the many sops announced in the budget for the rural areas and the middle class, did not attract buyers. Stocks in the fast moving consumer goods (FMCG), healthcare and auto stocks witnessed heavy selling pressure. "While the government's growth assumptions appear reasonable, we think the government will continue to face challenges in meeting its fiscal targets, primarily due to structural increases in spending and difficulties in raising revenue further," Gene Fang, from global ratings agency Moody's, reportedly said. There are others who also fear that the finance ministry may be underestimating the deficit- the excess of expenditure over the earnings. "Market is fearing a fiscal slippage because of various announcements in the Interim Budget, like the higher borrowing programs by the government," Rusmik Oza, Head-Fundamental Research, Kotak Securities, told IANS. If indeed the fiscal deficit is more than what the government has projected, it would weaken the rupee, make imports costlier and push up inflation. 
 
 
 
 
 
 
 
 
 
 
 
 <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[
<div class="flourish-embed" data-src="visualisation/211678"></div>
]]></cdata></div>























 There could be many reasons for why the deficit may exceed the target. "the government's estimate of GST collection in FY19 is on the higher side. The nominal GDP growth rate of 11.5% is also difficult to achieve," Oza said. The capital expenditure for the next year is 6%, which is very low according to Oza. Spending less on capital expenditure means the government is investing less on assets that will generate income in the future. India already spends a lot more on running the government than on assets that can produce growth. 
 
 
 
 
 
 
 
 
 
 
 <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[
<div class="flourish-embed" data-src="visualisation/211623"></div>
]]></cdata></div>





















 The market will continue to evaluate the budget proposals for a few more days. "Fears of slippage is because of governments fiscal deficit target of 3% in FY21. The 3.4% target for next year is also not good. It is not possible to reduce 0.4 per cent in a year," Deepak Jasani of HDFC Securities told the IANS. --With inputs from IANS

Markets just can't believe India's latest budget math

<ul><li>The central government is all set to raise a crucial sum of ₹140 billion by offloading a 9% stake in the state-owned <keyword id="45383" type="COMPANY" weightage="20" keywordseo="Coal-India">Coal India</keyword> this week. </li><li>The sale will not only help the government as it tries to meet its <keyword id="44532" type="PERSON" weightage="20" keywordseo="Disinvestment">disinvestment</keyword> target, but also help it comply with a law that states that all publicly-listed state-owned firms should have a public shareholding of at least 25%. </li><li>The Department of Investment and Public Asset Management (DIPAM), the ministry in charge of overseeing the government’s disinvestment programme, has only raised a meagre ₹100 billion so far this year, compared to a target of ₹800 billion. </li></ul>Faced with strained finances, the central government is all set to raise a crucial sum of ₹140 billion by offloading a 9% stake in the state-owned Coal India, the country’s largest coal producer and miner, this week, according to <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/CF408D5A_04D0_443B_94A4_66300B7017B1_172415.pdf">a stock exchange filing</a>. Of this, 3% will be sold to the institutional investors while an additional 6% will be offloaded directly to retail investors if the offer is oversubscribed. The sale will not only help the government as it tries to meet its disinvestment target for the year, but also help it comply with an important Indian law, which states that all publicly-listed state-owned firms should have a public shareholding of at least 25%. Once the listing of a 9% stake is completed, the Centre will retain a 69% stake in the coal producer. The government needed to increase the public’s shareholding in Coal India to 25% by August 2017- a deadline which was reportedly <a href="https://economictimes.indiatimes.com/markets/stocks/news/centre-to-offload-9-in-coal-india/articleshow/66440076.cms">extended</a> as it deliberated over the sale and waited for a optimal share price. In early 2015, the government listed a 10% stake in the company, earning ₹230 billion in the process. Disinvestment woes Despite the share sale, the government could fall short of its disinvestment target of ₹800 billion for 2018-19, which is significantly less than the ₹1 trillion it raised last year. It has a number of further offerings lined up in this year but could suspend them owing to weak market conditions. The Department of Investment and Public Asset Management (DIPAM), the ministry in charge of overseeing the disinvestment programme, has only raised a meagre <a href="https://dipam.gov.in/">₹100 billion </a>so far this year. Indian markets have been battered this year amid an exodus of foreign capital outflows, a depreciating currency, rising fuel prices and global trade tensions. The sale of a 9% stake in Coal India marks the government’s first offer-for-sale in the current fiscal year. As the year winds to a close, it is expected to accelerate its disinvestment programme by <a href="https://economictimes.indiatimes.com/news/economy/policy/govt-may-step-up-disinvestment-drive-with-power-psus-mergers/articleshow/66438530.cms">merging</a> a number of public-sector companies in the power sector. Potential deals include a takeover of SJVN, a hydropower producer, by NTPC, India’s largest power generator. However, experts have cautioned against the move, saying that by forcing large state-owned companies to take over smaller ones, the government could be putting the profitability of large public-sector firms at risk.

India’s government is selling a minority stake in the nation’s largest coal producer as it tries to meet its disinvestment targets for the year

<ul><li>The Indian <keyword id="6355302" type="UNKNOWN" weightage="20" keywordseo="Rupee">Rupee</keyword> fell below the 71 mark to 70.69 against the US Dollar on 22 November, a significant improvement over the all-time low of 74.4 in the second week of October. </li><li>The rupee’s appreciation is largely due to the fall in global <keyword id="6359072" type="UNKNOWN" weightage="20" keywordseo="oil">oil</keyword> prices, a consequence of the rise in global supply and the Trump administration’s decision to grant waivers to eight countries, including <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword>, from sanctions for their purchases of Iranian oil. </li><li>The decline in oil prices and appreciation of the rupee will bring a modest relief for the Indian <keyword id="26362" type="ORGANIZATION" weightage="20" keywordseo="Government">government</keyword> as it struggles to meet its <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword> target. It will also ease pressure on the Reserve Bank of India, which has been dipping into its forex reserves to prop up the rupee. </li></ul> After the hullabaloo caused in recent months about the Indian Rupee’s dramatic <a href="https://www.businessinsider.in/rupee-hits-another-all-time-low-but-india-need-not-worry-yet/articleshow/65753604.cms">depreciation</a>, it seems that the Indian government can rest easy for the time being. The rupee fell below the 71 mark to 70.69 against the US Dollar on 22 November, a significant improvement over an all-time low of <a href="https://indianexpress.com/article/business/rupee-soars-past-71-sliding-oil-rising-foreign-capital-inflows-5460312/">74.4</a> in the second week of October. The main reason for this reversal in fortune? Falling oil prices. The global price of Brent Crude has fallen from an annual high of <a href="https://oilprice.com/oil-price-charts/46">$86.80 a barrel</a> on 3 October to the current level of $62.30, which has been a blessing for India as it imports around 70%-80% of its oil requirements. This is largely a consequence of the rise in production from Saudi Arabia, the US and Russia as well the Trump administration’s decision to grant <a href="https://www.businessinsider.in/india-among-the-eight-countries-allowed-to-continue-buying-oil-from-iran-even-after-the-us-reimposes-sanctions-but-theres-a-catch/articleshow/66475463.cms">waivers to eight countries</a>, including India, from sanctions for their purchases of Iranian oil. Prior to the waiver, it was widely expected that the sanctions on Iranian oil would drive global prices up even further. As oil prices were rising prior to October, India was having to pay more for fuel, which led to the the widening of the country’s current account deficit and hence, leading to a weaker rupee. This was compounded by a surge in outflows of foreign capital, which has also reversed in November. The decline in oil prices and appreciation of the rupee will bring a modest relief for the government as it heads into an election year. That is because it now has a better chance of meeting its fiscal deficit target of 3.2% of GDP for 2018-19. Meanwhile, the <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> won’t have to worry as much in the short-term about dipping into its forex reserves or keeping inflation in check. This, in turn, will increase the likelihood of interest rates being kept on hold at the next meeting of the central bank’s Monetary Policy Committee next month. However, the decline in oil prices will not go down well with the Organization of the Petroleum Exporting Countries (<keyword id="47969" type="COMPANY" weightage="20" keywordseo="Opec">OPEC</keyword>). If the OPEC countries decide on a production cut to contain the global oil prices it could spell trouble again for the currencies of oil importers like India. On the other hand, with the US Federal Reserve expected to <a href="https://www.bloomberg.com/news/articles/2018-11-21/fed-seen-primed-for-2019-pause-as-growth-market-headwinds-swirl">pause on its rate hikes</a> in 2019, that could lead to a continued increase in foreign capital inflows in emerging markets. SEE ALSO: <a href="https://www.businessinsider.in/india-secures-japans-help-in-saving-the-rupee-by-signing-its-largest-currency-swap-agreement-with-the-country-ever/articleshow/66427088.cms">India secures Japan’s help in saving the rupee by signing its largest currency swap agreement with the country ever</a> <a href="https://www.businessinsider.in/heres-what-indian-importers-are-doing-to-hedge-their-positions-as-the-rupee-plummets/articleshow/65623528.cms">Here’s what Indian importers are doing to hedge their positions as the rupee plummets</a> <a href="https://www.businessinsider.in/rupee-hits-another-all-time-low-but-india-need-not-worry-yet/articleshow/65753604.cms">Rupee hits another all-time low, but India need not worry yet</a>

Oil prices are falling and that’s great news for the Indian Rupee

As expected, the government will breach its <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword> target of <keyword id="2464406" type="PERSON" weightage="20" keywordseo="3-3">3.3%</keyword> of <keyword id="35050" type="CITY" weightage="20" keywordseo="gdp">GDP</keyword> for 2018-19. Upon unveiling the government’s interim <keyword id="6358021" type="ORGANIZATION" weightage="20" keywordseo="budget">budget</keyword> in the Parliament today, the acting Finance Minister <keyword id="6355222" type="PERSON" weightage="20" keywordseo="piyush-goyal">Piyush Goyal</keyword> said that the deficit was expected to be 3.4% of GDP. This was largely due to the shortfall in tax revenues, higher spending obligations and a sluggish disinvestment programme. That was further exacerbated by farm loan waivers and generous spending on welfare schemes to secure votes. This comes despite help from the Reserve Bank of India in the form of an interim dividend. In August 2018, the Reserve Bank of India (RBI) announced that it was transferring <a href="https://www.businessinsider.in/a-big-handout-from-the-rbi-could-help-the-indian-government-meet-its-fiscal-deficit-target/articleshow/65336769.cms">₹500 billion</a> to the central government’s coffers, in addition to the ₹100 billion it paid in March. The interim dividend was meant to shore up the government’s finances amid rising oil prices, falling forex reserves and a worsening bad loan crisis. In fact, as of November 2018, the government had already blown through <a href="https://economictimes.indiatimes.com/news/economy/indicators/april-november-fiscal-deficit-touches-nearly-115-per-cent-of-fy-target/articleshow/67272193.cms">115% </a>of its budgeted market borrowing for the fiscal year. The government had budgeted a fiscal deficit of ₹6.24 trillion for the whole year and had already spent ₹7.15 trillion by November, with five months to go. This is the third straight year the government has failed to meet its fiscal deficit target. It has raised its target for the next year to 3.5% as a resul SEE ALSO: <a href="https://www.businessinsider.in/indian-government-may-not-meet-its-fiscal-deficit-target-because-of-lower-tax-collections-india-ratings/articleshow/66824092.cms">Indian government may not meet its fiscal deficit target because of lower tax collections: India Ratings</a> <a href="https://www.businessinsider.in/a-big-handout-from-the-rbi-could-help-the-indian-government-meet-its-fiscal-deficit-target/articleshow/65336769.cms">A big handout from the RBI could help the Indian government meet its fiscal deficit target</a>

The Indian government expects to overshoot its fiscal deficit target by 0.1% of GDP

Manifestos are meant to be about things that cannot be achieved. The best example of this perhaps is The Communist Manifesto written by Karl Marx and Friedrich Engels. Those still left with the left, continue to believe that one day, the words written by the prophets in this manifesto, will come true. As the Hindi film lyricist and poet Sahir Ludhianvi once wrote: “wo subah kabhi to aayegi (the morning we are waiting for will come one day).” The Congress party released its manifesto for the 2019 Lok Sabha elections earlier this week. On the whole, the manifesto makes the right noises about getting the Indian economy back on the right track. Nevertheless, there are a few points which when read together are simply not achievable and if they are, the party hasn’t explained how it plans to achieve it. Let’s take a look at this issue point-wise. 1) The first point that the manifesto makes in the economy policy section is: “Fiscal stability is the starting point. Congress promises to reverse the <keyword id="14666" type="ORGANIZATION" weightage="20" keywordseo="BJP">BJP</keyword> Government’s fiddling with the target of fiscal deficit… Off-Budget and extra-Budget borrowings will be faithfully reported with the justification for such debt and the means of servicing and repaying such debt.” Over the years, governments (including the previous Congress government) have managed to control fiscal deficit by simply not paying up on some expenditure. Fiscal deficit is the difference between what a government earns and what it spends. The government accounting works on a cash basis. So, if money does not leave the government account, no expenditure has been made. Take the case of <keyword id="6354672" type="ORGANIZATION" weightage="20" keywordseo="food-corporation-of-india">Food Corporation of India</keyword> (FCI). FCI and other state procurement agencies buy rice and wheat directly from farmers at a minimum support price, declared by the government. They then sell this rice and wheat at an extremely low price through the public distribution system (or what we call ration shops). By selling rice and wheat at an extremely low price, the FCI suffers losses. The government is supposed to compensate FCI for these losses through food subsidies allocated in the annual budget. Typically, over the last few years, the total amount of food subsidy allocated in the budget has not been enough to pay for the losses that FCI faces while selling rice and wheat. By not allocating enough food subsidies, the government doesn’t incur extra expenditure, in the process it keeps its expenditure as well as the fiscal deficit under control, and reports the fiscal deficit number it wants to. In the 2018-19, this allowed the government to report a fiscal deficit of 3.4% of the GDP, when its actual fiscal deficit was much more. FCI, in order to continue operating has to borrow money. In 2017-18, it borrowed Rs 1,21,000 crore just from the National Small Savings Fund because the government did not pay up on time. Of course, it could borrow money because ultimately any lending to FCI is seen as lending to the government and is based on the assumption that the government does not default on payments. Postponing payments to FCI is just one part of the trick. The right amount of fertiliser subsidies also don’t get paid on time. Over and above this, the borrowing carried out by Indian Railways for its expansion plans isn’t treated as government borrowing and in that sense, the interest paid on that debt as well as principal repayment, isn’t treated as government expenditure. The same thing is happening in the financing of power projects. In that sense, the Congress party’s plan to faithfully report the fiscal deficit can’t be argued against. The idea behind any set of accounts should be to present the right picture, which the current government accounts and consequently the fiscal deficit number, don’t present. 2) Just paying off FCI, is going to push the government fiscal deficit to around 4% of the GDP. Doing other things correctly will only push the fiscal deficit number up further. 3) Other than reporting the fiscal deficit number correctly, the Congress party if it comes to power, plans to waive off farm loans as well. As the manifesto points out: “Immediately after forming the governments in Chhattisgarh, Madhya Pradesh and Rajasthan, as promised, the three Congress Governments waived the loans of farmers. Congress promises to waive the outstanding farm loans in other States as well.” The manifesto further points out: “We will not stop with just providing “Karz Maafi” or a loan waiver. Through a combination of remunerative prices, lower input costs, and assured access to institutional credit, we will set our Kisans on the path to “Karz Mukti,” or Freedom from Indebtedness.” If the farm loans are waived off, banks which made those loans to the farmers, will have to be compensated for by the government. And any compensation will need money. This will push up government expenditure and the fiscal deficit further up. 4) The manifesto states: “Congress promises to achieve the target of 3% of GDP by 2020-21 and remain under that limit. The revenue deficit will be contained, as far as possible, under 1 per cent of GDP.” Take a look at Figure 1, which plots the fiscal deficit as a percentage of GDP, over the years. 
 
 
 
 
 
 
 <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[
<div class="flourish-embed" data-src="visualisation/280024"></div>
]]></cdata></div>















 The only year since 2004-5, in which the fiscal deficit as a percentage of the GDP has gone below 3%, was in 2007-08, when it was at 2.6% of the GDP. In the last few years, the fiscal deficit has been brought down by not paying fertiliser firms and FCI on time, along with moving capital expenditure outside the budget. The Congress wants to correct this. Along with this, it also wants to waive off loans given to farmers. Both these moves, will push up the fiscal deficit beyond 4% of the GDP. But at the same time, the party wants to get the fiscal deficit down to 3% of the GDP by 2020-21, if it comes to power. 2020-21 basically means the next financial year. How is this going to happen? The manifesto does not mention any new ways that the party has thought up, for raising revenue, other than selling non-core, non-strategic public sector enterprises, whatever that means. Hence, there is a paradox at the heart of the manifesto. The things that the party wants to do will cost money, and mean extra expenditure for the government; but at the same time, the party, if it forms the government, wants to control expenditure and hence, bring down the fiscal deficit as well. It wants to run a responsible fiscal policy. How will that be possible? We don’t know. Which is why I said at the beginning of this piece, that manifestos are meant to be about things that cannot be achieved. At the heart of the <keyword id="605976" type="UNKNOWN" weightage="20" keywordseo="CONGRESS-MANIFESTO">Congress manifesto</keyword> is one such thing which cannot be achieved. Vivek Kaul is a Business Insider India contributor. Kaul is an economist and the author of the ‘Easy Money’ trilogy.

There are two promises in Congress' election manifesto that cut each other out

<ul><li>Rupee is expected to stay weak as <keyword id="6359072" type="UNKNOWN" weightage="20" keywordseo="oil">oil</keyword> prices rise. </li><li>Markets fear the Indian government will breach <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword> target. </li><li>Higher fiscal deficit hurts government’s ability to spend for economic growth and increases borrowing cost. </li></ul> The rupee closed at 70.49 at the end of last week, capping a 4% decline since the start of the year.This is largely due to the fact that oil prices ticked up and markets have priced in a series of handouts to farmers by the government as an election ploy. Last year proved to be a mixed bag for the Indian currency. After declining by 14% in the year to October, the rupee rebounded strongly in the last few months of 2018 owing to the decline in oil prices, and closed at 69.71. The value of the rupee has significant implications on India’s fiscal deficit and vice versa. When the rupee declines, the fiscal deficit, which measures the difference between government expenditure and revenue, widens because oil becomes more expensive to import. On the other hand, if India’s fiscal deficit widens, it causes foreign investors to lose confidence in the economy and hence they pull money out of the country, which further weakens the currency. With oil prices expected to grow sluggishly in the initial period of year, the rupee is expected to stay weak. However, the unveiling of the Union <keyword id="6358021" type="ORGANIZATION" weightage="20" keywordseo="budget">Budget</keyword> on 1 February by Finance Minister Arun <keyword id="6390789" type="PERSON" weightage="20" keywordseo="jaitley">Jaitley</keyword> could provide markets and currency speculators with some much-needed clarity as to where the rupee will go in 2019. The Budget, which will be an interim budget since it is an election year, will likely include a conclusive statement on whether the central government will breach or meet its fiscal deficit target for the year - which is 3.3% of <keyword id="35050" type="CITY" weightage="20" keywordseo="gdp">GDP</keyword>. The target has looked increasingly unrealistic in recent months, due in part to lower indirect tax collections, a slow disinvestment process and concessions to farmers. While the government has tried to curtail its capital expenditure, this might not be enough. “It will be quite difficult for the government to achieve its target as the fiscal deficit is currently in the region of 3.9% of GDP” says Gaurav Sharma, a senior manager at Religare Securities. Sharma explained that if this came to pass, it “would seriously hurt the rupee”. However, if the government breaches its deficit target, it will exacerbate investor worries, as a high deficit threatens India’s ability to spend for economic growth and increase it’s borrowing cost. There is room for surprise, though. Even if the fiscal deficit is wider, but less than experts’ predictions, it could provide support for the currency. On the other hand, with elections due in May 2019, the government expected to play into the desires of key voter blocs, and as such, could include further promises of loan waivers and additional financial largesse. The central government, for its part, has said that it will meet its fiscal deficit target. Towards the end of December, Jaitley said <a href="https://economictimes.indiatimes.com/news/economy/policy/government-to-meet-fiscal-deficit-target-of-3-3-arun-jaitley/articleshow/67207903.cms">that the 3.3% mark was in sight,</a> and subsequently clarified that the government <a href="https://indianexpress.com/article/india/not-seeking-rbi-surplus-to-finance-fiscal-deficit-arun-jaitley-5517571/">would not require a surplus </a>from the central bank’s coffers to meet its goal. As things stands, until the interim budget is unveiled, it seems that all bets are off. SEE ALSO: <a href="https://www.businessinsider.in/the-indian-rupee-just-clocked-its-highest-one-day-gain-since-2013-as-global-oil-prices-plummeted-to-a-yearly-low/articleshow/67158268.cms">The Indian rupee just clocked its highest one-day gain since 2013 as global oil prices plummeted to a yearly low</a> <a href="https://www.businessinsider.in/oil-prices-are-falling-and-thats-great-news-for-the-indian-rupee/articleshow/66768210.cms">Oil prices are falling and that’s great news for the Indian Rupee</a> <a href="https://www.businessinsider.in/indian-government-may-not-meet-its-fiscal-deficit-target-because-of-lower-tax-collections-india-ratings/articleshow/66824092.cms">Indian government may not meet its fiscal deficit target because of lower tax collections: India Ratings</a>

Here’s why the rupee will remain weak at least until Arun Jaitley’s budget speech

Mumbai, Dec 17 () Former Reserve Bank Governor D Subbarao on Tuesday asked the government to ensure fiscal deficit is within the targeted number and warned that "fiscal profligacy" can lead to crisis situations.
 The comments weeks after official data indicated that the government has exhausted 107 per cent of the budgeted deficit gap of 3.4 per cent with five months to go for the fiscal end.
 "We got to be careful about managing our fiscal deficit and keep it within the fiscal deficit targets," Subbarao said.
 Speaking over a video link at the Times Network's India Economic Conclave here, he said a higher fiscal deficit fuels inflation, crowds out private investment and impairs Balance of Payments (BoP) by resulting in current account deficit-related issues.
 Subbarao said BoP-related issues, including the 1991 financial crisis and also the taper tantrums of 2013 during his governorship of the RBI can be traced back to "fiscal profligacy".
 "Both the quantum of fiscal deficit and quality of fiscal deficit are a cause for concern," Subbarao, under whose watch RBI used to regularly warn the government on fiscal deficit, said.
 He also said the "true picture" of the fiscal deficit may not be visible to all of us because of aspects like off-balance sheet borrowings by quasi-sovereign entities and also due to payment deferrals.
 Subbarao pointed out that the nominal GDP growth has fallen to as low as 6.1 per cent, and explained that it would have a direct impact on the revenue collections both at the Centre as well as the state level, which can impact the fiscal deficit situation.
 The bureaucrat-turned-central banker also said that adequate attention needs to be given to the quality of the fiscal deficit, maintaining that it is not bad for the governments to borrow to invest in capital expenditure. AA RAM

Former RBI chief Subbarao cautions against 'fiscal profligacy'

<ul><li>For the third straight year, the Indian government’s fiscal deficit is likely to be 3.5% of GDP instead of 3.3%, ratings agency India Ratings &amp; Research has predicted. </li><li>As per the calculations by the research firm, the fiscal deficit may breach the budgeted target of ₹6.24 trillion </li><li>According to India Ratings, the country’s GST tax collection for the first half of <keyword id="4873520" type="PERSON" weightage="20" keywordseo="fy19">FY19</keyword> stood at 4.3% against its budgeted growth of 22.2% for FY19. </li></ul>The Indian government may not be able to meet its fiscal deficit target for FY19 in part due to the shortfall in tax revenues and lower disinvestment revenue, rating agency, India Ratings &amp; Research, has <a href="https://www.indiaratings.co.in/PressRelease?pressReleaseID=34920&amp;reportName=For-Third-Consecutive-Year%2C-Fiscal-Deficit-Likely-to-be-3.5%25-of-GDP">warned.</a> As per the calculations by India Ratings, India’ fiscal deficit is likely to be ₹399 billion more than what was targeted by India’s <keyword id="47209" type="ORGANIZATION" weightage="20" keywordseo="Finance-Ministry">Finance Ministry</keyword> earlier this year, India Ratings said in a recent report. The government had set a fiscal deficit target of ₹6.24 trillion or 3.3% of GDP. But given the current financial trends, the deficit is likely to be ₹6.67 trillion or 3.5% of GDP, said the report. This will be the third consecutive year when India’s fiscal deficit will be 3.5% of GDP, noted the report. The agency anticipates a tax revenue shortfall of ₹224 billion primarily because of the shortfall in proceeds from direct and indirect tax collection. Despite the government’s efforts to prevent revenue leakage in GST, tax collection only rose 4.3% during the first half of FY19, much lower than the budgeted growth of 22.2% for FY19. Additionally, the government is also likely to miss its disinvestment target due to lower receipts. As of October, total disinvestment receipts were nearly ₹152 billion against the budgeted receipt amount of ₹800 billion. Even though the central government may expect a pick up in disinvestment in December but it will not be enough to make up for the shortfall, said India Ratings. Revenue Expenditure growth, which was also slightly lower than the target in the first half of FY19 is now expected to boost mainly because of a surge in the minimum support prices of kharif crops and the implementation of the government’s Ayushman Bharat program for bringing affordable insurance for Indian masses. SEE ALSO: <a href="https://www.businessinsider.in/indias-securities-regulator-wants-to-develop-indias-corporate-bond-market-so-it-has-ordered-large-companies-to-raise-at-least-25-of-their-long-term-debt-from-bond-sales/articleshow/66823456.cms">India’s securities regulator wants to develop India’s corporate bond market — so it has ordered large companies to raise at least 25% of their long-term debt from bond sales</a> <a href="https://www.businessinsider.in/after-weeks-of-tension-the-reserve-bank-of-india-gives-in-to-some-of-the-central-governments-demands-while-retaining-its-independence/articleshow/66705908.cms">After weeks of tension, the Reserve Bank of India gives in to some of the central government's demands while retaining its independence</a> <a href="https://www.businessinsider.in/modi-administration-pushing-full-budget-ahead-of-general-elections-2019/articleshow/66750097.cms">Modi administration is so confident about its re-election chances that it’s reportedly releasing a full budget for the next financial year</a>

You Searched For "Fiscal Deficit India" and got 11 results

SBI pegs India's fiscal deficit at 7.4% of GDP

IANS

Indian government's spending and income gap in May stands at 8.2% of annual target

PTI

India's fiscal deficit is more than double its FY21 target

PTI

Markets just can't believe India's latest budget math

Sriram Iyer

India’s government is selling a minority stake in the nation’s largest coal producer as it tries to meet its disinvestment targets for the year

Dilsher Dhillon

Oil prices are falling and that’s great news for the Indian Rupee

Dilsher Dhillon

The Indian government expects to overshoot its fiscal deficit target by 0.1% of GDP

BI India Bureau

There are two promises in Congress' election manifesto that cut each other out

Vivek Kaul

Here’s why the rupee will remain weak at least until Arun Jaitley’s budget speech

Former RBI chief Subbarao cautions against 'fiscal profligacy'

PTI

Indian government may not meet its fiscal deficit target because of lower tax collections: India Ratings

BI India Bureau

Popular Keywords

Buying Guides