Fiscal deficit in April - November FY2014 reaches 94% of budgeted estimate - Angel Broking

The April - November 2013 fiscal deficit has already reached 93.9% of budgeted estimate (BE) for FY2014 as a whole as compared to 80.4% of BE in the corresponding period of the previous year. The revenue deficit for April - November 2013 has exceeded the budgeted estimate at 103.5% of the BE as against 91.2% of the BE in the similar period for FY2013.

On the receipts side, the widening of the deficit can be attributed to slippage on tax revenues as well as slow progress on disinvestment. The sluggish pace of growth has impacted tax revenues and resulted in net tax revenues coming in at 44.8% of BE in FY2014 so far as against 47.9% of BE during the corresponding period during FY2013. The slow progress on disinvestment is reflected in capital receipts on that account coming in at merely 2.8% of BE in April - November 2013 as against 7.3% of BE during the corresponding period in FY2013. On the expenditure side, total public spending incurred in the eight months of FY2014 has come in at 61.3% of the BE of FY2014 as against 58.2% of BE during the corresponding period during FY2013.

We believe that progress on the divestment program going forward and cuts in plan spending and austerity measures announced by the Finance Ministry are likely to aid in containing the fiscal deficit to some extent hereon. We note that the government is taking measures to reduce plan expenditure similar to its efforts at the same during FY2013. For FY2013 as a whole, the government curtailed plan expenditure to merely 79.5% of BE of the fiscal year. At present, in the eight month period it stands at 52.4% of the BE for FY2014. However, revenues are unlikely to keep pace with budgeted levels and hence we expect a slippage of 0.2-0.4% of GDP in the fiscal deficit.

Source : Equity Bulls

Keywords