India runs the risk of losing the fiscal deficit target of 3.3 CP if tax revenues have a lower performance: Moody's

New Delhi, July 5 () Moody's Friday said there are risks that India will not reach the fiscal deficit target of 3.3 percent for the current fiscal year if tax revenues do not reach the projection.

The 2019-20 Budget reduced the projection of the fiscal deficit for the current fiscal year to 3.3 percent from the 3.4 percent predicted in the Provisional Budget 2019-20 in February. The fiscal deficit, which is the gap between public spending and income, was 3.4 percent in 2018-19.

There is a risk that India will lose its deficit target for fiscal year 2019 if revenues from tax revenues exceed projections, as it did last year, said Gene Fang, associate managing director of Moody's Investors Service (Sovereign Risk Group). ).

The rating agency, however, said that the general deficit can be achieved, but through the dependence on extraordinary revenues, such as divestments and transfers from the central bank, and spending outside the budget.

The government has set the divestment target for the current fiscal year at Rs 1.05 lakh crore, above Rs 90,000 crore projected in the Provisional Budget for 2019-20 in February.

Moody's said that in the Budget, the government of India announced a lower fiscal deficit target for the 2019 fiscal year, while maintaining its support for growth and revenue.

Achieving these competitive objectives will be a challenge. We expect the economy to grow relatively slowly, despite measures to support government revenues, Fang said.

In addition to financing, an expansion of support to farmers, a new pension plan and relief for small taxpayers, as previously announced, the latest Budget includes a recapitalization of state banks of Rs 70,000 million. This will support growth by encouraging the flow of credit to the economy, while at the same time increasing government debt, said Fang. JD HRS