India's spending this fiscal year could be less than forecast for the first time in three years . The government is pushing to reach a fiscal deficit target of 6.4% of gross domestic product .
NEW DELHI: According to two sources familiar with the situation, the Indian government's spending this fiscal year could be less than forecast for the first time in three years, according to Reuters, in the midst of a push to reach a fiscal deficit target of 6.4% of gross domestic product.According to sources, the total expenditure for the 202223 fiscal year, which started on April 1, could range from 700 billion to 800 billion rupees ($8.59 billion to $9.82 billion), less than the planned 39.45 trillion rupees.The government is aiming to keep the budget deficit at bay as it is well above historical averages of 4% and 5%, having hit a record of 9.3% during the first year of the Covid-19 pandemic in 202021.Though tax cuts on fuel, which aim to minimize the effects of rising global energy prices, could reduce revenues by more than 1 trillion rupees, one of the sources said total revenues are still forecast to increase by over 1.5 trillion to 2 trillion rupees this year.
Despite these obstacles, the government is still committed to meeting its deficit target, according to one of the sources.According to the source, the government isn't going to budge from its fiscal deficit target, but cautioned that a budget rationalization is necessary.As negotiations over revised budget projections were ongoing, the sources did not specify which segments were likely to be affected by spending cuts, and a final decision would be made by the end of December.The finance ministry declined to respond. Kotak expects a fiscal deficit of 6.6% without spending cuts, while the ICRA expects the government to overshoot the deficit target of 16.61 trillion rupees by 1 trillion rupees.