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India's Apr-Jul fiscal deficit 43.9% of target

India's fiscal deficit in the first four months of this financial year, which began in April was 43.9 per cent of the target for the full year because of strong revenue receipts, government figures showed on Thursday.

Data released by the government on its Web site showed the deficit was Rs 59,527 crore (Rs 595.27 billion) compared with Rs 58,628 crore (Rs 586.28 billion) in the year-ago period.

The deficit in the April-July period in 2001-02 (April-March) was 50.4 per cent of the full year target of Rs 1,16,314 crore (Rs 1,163.14 billion).

Analysts said the figures in the four months up to July this year were more or less in line with budget estimates but the impact of the country's worst drought in 15 years could widen the deficit which the government expects to limit to 5.3 per cent of GDP in 2002-03.

Some analysts said the government's overall spending pattern remained a matter of concern which could also widen the fiscal gap in the months ahead.

"There is a possibility of the government spending more if it has to extend finance to state governments to support a drought relief plan," said Dhananjay Sinha, analyst at JM Morgan Stanley.

The government is yet to release the damage estimates from the drought. Global rating agencies say India's yawning fiscal deficit is a huge obstacle to raising its sovereign rating which is at junk bond levels.

Net tax revenues between April and July were 18.6 per cent of the 2002-03 budget estimate of Rs 1,72,965 crore (Rs 1,729.65 billion) compared with 14.5 per cent of Rs 1,63,031 crore (Rs 1,630.31 billion) in the same period last year.

Non-tax revenues, which include dividend from state-run firms and interest income, were 14.2 per cent of the estimated Rs 72,140 crore (Rs 721.40 billion) compared with 12.6 per cent of the estimated Rs 68,714 crore (Rs 687.14 billion) last year.

"Revenue growth may take a hit, especially in the third and fourth quarter of the current financial year, because of the drought and a possible global slowdown, which could impact industrial growth," said Sanjeet Singh, an analyst at ICICI Securities and Finance.

Some analysts were concerned by the growth of government spending in the first four months of the fiscal year.

Total spending was 26.7 per cent of the budgeted estimate of Rs 4,10,309 crore (Rs 4,103.09 billion) compared with 25.1 per cent of the estimated Rs 3,75,223 crore (Rs 3,752.23 billion) last year.

"The pace of growth of receipts has slackened in July, while the pace of growth in expenditure has increased, which is worrying," said Indranil Pan, associate vice-president at Kotak Mahindra Capital Company.

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