India to stick to fiscal prudence despite threats from disinvestment and weather hindrances

economictimes.indiatimes.com:

budget deficit target for this fiscal year is very slim at the moment despite weather hindrances, divestment revenue risks and meek corporate tax collections, thanks to support from the central bank, economists said. “The government has clearly got a much better dividend from the Reserve Bank of India,” Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank, told ET Online.

There may be some amount of change happening because of probable downsizing on the nominal GDP growth that we expect compared to what the government is expecting. But having said that, there is a buffer at the moment from the dividend that the government has received from the RBI,” she added.

Debopam Chaudhuri, Chief Economist at Piramal Enterprises also said that globally, rating agencies are predicting a slippage in India’s fiscal deficit target in this fiscal year that started April 1, especially owing to a downward revision in GDP growth, but he believes India is well on track to narrow the budget gap to 5.9% of GDP. “Any slippage, if at all, should be restricted within 10 bps of the target,” he said.

The RBI had nearly tripled its annual surplus transfer to the government to ₹87,416 crore as surplus for the fiscal year ended March, up from Rs 30,307 crore a year earlier, helping the state reap a windfall that will ease worries about any strain on its finances amid flailing asset sales. While announcing the federal budget for this fiscal year, Finance Minister Nirmala Sitharaman said India aims to narrow the fiscal gap to 5.9% of gross domestic product from 6.4% in the last financial year.