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Fiscal deficit target of 4.1% GDP likely to be met: Citi

The government is likely to meet its fiscal deficit target of 4.1 percent GDP for the current financial year, says global brokerage firm Citigroup.

The fiscal deficit target of 4.1 percent of GDP for 2014-15 is likely to be met though the fiscal trends are “weak”, it said.

As per the data released by Controller General (CGA) of Accounts, India’s fiscal deficit overshot the budget estimate of Rs 5.31 lakh crore by December-end.

However, a “compression” in plan expenditure coupled with a pick-up in divestments, would likely help the government meet its 2014-15 fiscal deficit of 4.1 percent of GDP, it said.

“We believe the fiscal deficit roadmap of 4.1 percent, 3.6 percent and 3 percent of GDP in FY15-FY17 will likely be adhered to thanks to imminent revenue and expenditure reforms, lower crude and an uptick in growth,” Citigroup India economist Rohini Malkani said in a research note.

The fiscal deficit during April-December period was Rs 5.32 lakh crore or 100.2 percent of the 2014-15 estimate, mainly because of subdued revenue realisation.

The fiscal deficit — the gap between government expenditure and revenue — during the same period last year was at 95.2 percent of that year’s target.

“While there is some chatter of additional spending to prop up growth, we expect the government to largely adhere to its roadmap on three key factors — expenditure side reforms in areas of direct benefit transfers; pick-up in growth; improved tax buoyancy and decline in crude prices, which will help lower both fuel/fertiliser subsidies,” the report added.

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