High current account deficit, however, remains a major concern.
Global oil prices fell on Thursday to their lowest levels since before the outbreak of the Iran conflict, offering a significant economic tailwind for India, the world's third-largest crude importer, by easing inflation risks, reducing the import bill and improving the government's fiscal position.
India's macroeconomic fundamentals are strong to deal with global challenges and the central government is committed to sticking to the fiscal deficit target of 6.4 per cent of the GDP for the current fiscal, official sources said on Monday. The government is taking steps to deal with the spiralling crude oil prices in the international market, the sources said. India meets nearly 85 per cent of its oil demand through imports and a weaker rupee makes imports costlier.
India has launched anti-dumping investigations into imports of thermal paper, Biaxially Oriented Polyamide (BOPA) Film, and certain antioxidants from China, following complaints from domestic manufacturers alleging material injury due to cheap imports.
Chidambaram had gone the whole hog to contain the fiscal deficit by compressing expenditure and making extra efforts to improve revenue collection.
The deficit for the first five months of the year stood at 96 per cent of the full-year target of Rs 5.46 lakh crore despite cut in capital expenditure in August.
The Centre could better its fiscal deficit at 6.6 per cent of GDP in this financial year on stronger-than-expected revenue buoyancy, even if the budgeted disinvestment target is not met, Fitch Ratings has said. The international rating agency had last week kept the sovereign rating unchanged at 'BBB-' with a negative outlook, and said that the risks to India's medium-term growth outlook are narrowing with rapid economic recovery from the pandemic and easing financial sector pressures. In an email interview with PTI, Fitch Ratings Director (Asia-Pacific Sovereigns) Jeremy Zook said the two key positive triggers that could lead to a revision of the outlook to stable are implementation of a credible medium-term fiscal strategy to lower debt burden and higher medium-term investment and growth rates without the creation of macroeconomic imbalances, such as from successful structural reform implementation and a healthier financial sector.
S Mahendra Dev, chairman of the Economic Advisory Council to the Prime Minister, expressed confidence that the rupee would stabilise around the 92-93 level against the US dollar, despite geopolitical tensions, and that foreign investment flows would return.
Even to the more jaded India hands inured to the tricks of the country's fiscal trade, an overwhelming element of jugaad - that desperate bid to somehow put the decades-old family Ambassador together for that one final ride - is apparent.
In a rare feat, the Centre has managed to bring down fiscal deficit marginally to Rs 83,843 crore (Rs 838.43 billion) during the first six months of this financial year from Rs 86,328 crore (Rs 863.28 billion) till August.
Excise collections for April have been badly hit, resulting the fiscal deficit touching 16 per cent of target in the very first month itself, which could douse expectations of interest rate cuts.
Gross fiscal deficit of the central government during 2002-03 is likely to be higher at Rs 1,52,300 crore (Rs 1,523 billion) as against the budgeted amount of Rs 1,35,524 crore (Rs 1,355.24 billion), according to CMIE.
A majority of fixed income investors expect the fiscal deficit to stay close to the government's target of 5.5 per cent or lower in the year to March 2011, according to a Fitch Ratings survey of money managers at asset management companies, life insurers, pension funds and banks.
Government determined to bring down fiscal deficit to 5.1 per cent of GDP next fiscal.
The fiscal deficit totalled Rs 83,394 crore (Rs 833.94 billion) at the end of November, representing 61.5 per cent of the Budget estimate of Rs 1,35,524 crore (Rs 1.355.24 billion), according to data released on Tuesday.
Fiscal deficit in the first four months of 2012-13 stood at 51.5 per cent of the budget estimates -- slightly better compared to 55.4 per cent in the same period a year ago -- according to Controller General of Accounts (CGA) data released on Friday.
Finmin wants higher advance tax from India Inc, interim dividend from PSUs.
Banks should neither be timid nor adventurous while lending as the loans of today should not become NPAs of tomorrow, he said.
The World Bank has warned India that its growth prospects are weakened by high fiscal deficits and slow reforms, and the country needs to accelerate poverty reduction efforts.
The RBI said that strong signs of fiscal consolidation are necessary to create a space for lowering policy rate without the risk of resurgent inflation.
India is not so worried about meeting fiscal deficit target.
The fiscal deficit in the first five months of the current fiscal ended August stood at Rs 3.69 lakh crore, or 66.5 per cent, of Budget estimates for 2015-16.
At a time when major economies have increased spending, India will have to do the same.
The conflict may disrupt Budget 2026-2027 projections, squeezing revenues and raising subsidies, prompting fiscal adjustments and potential reforms, echoing lessons from the Covid-era shock, points out A K Bhattacharya.
India's fiscal deficit has come down marginally to Rs 92,435 crore (Rs 924.35 billion) till December this fiscal from Rs 93,656 crore (Rs 936.56 billion) till November.
In absolute terms, fiscal deficit, or the gap between overall expenditure and receipts, stood at Rs 74,611 crore (Rs 746.11 billion) in the first month of the current fiscal, against Rs 53,993 crore (Rs 539.93 billion) in the same period last financial year (2010-11).
Despite rising subsidy bill, says fuel price action and other steps in contemplation would keep it at 5.3% of GDP, not more
The Economic Survey today pegged the fiscal deficit for 2010-11 at 4.8 per cent, lower than the Budgetary estimates of 5.5 per cent, on the back of higher realisation from 3G spectrum auction and buoyancy in revenues.
The deficit represents 39.7 per cent of the estimate for the current financial year.
FY14 economic growth rate pegged at 4.8-5.3%, WPI inflation set to rise
In comparison, the central government's fiscal deficit stood at Rs 3.06 lakh crore (Rs 3.06 trillion) in the corresponding period of the previous financial year.
India's plan to double gas prices from April threatens to hit government efforts to cut its fiscal deficit.
Fiscal deficit, a measure that tells if the government is spending within its means, was to come down to 2.5 per cent of GDP this fiscal, but would now be wide off the target at 6 per cent because of a fall in tax revenues, owing to the global financial meltdown, and measures to stimulate the economy.
Don't waste the money on politically motivated social programmes.
India plans to keep its fiscal deficit within 3.9% of GDP.
For 2017-18, the government aims to bring down the fiscal deficit to 3.2 per cent of the GDP. Last fiscal, it had met the 3.5 per cent target.
India's fiscal deficit soared by 34 per cent to Rs 3.5 lakh crore in the first ten months of the financial year against Rs 2.62 lakh crore a year ago, mainly on account of the stimulus measures taken by the government to prop up the economy hit by the global financial crisis.
Stating that India's consolidated deficit is the highest among the G20 nations, Gopinath added it is important for India to undertake reforms.
