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April-July fiscal deficit 50.4 per cent of target

India's fiscal deficit for the first four months of the financial year totalled 50.4 per cent of the target for the full year, government data showed on Friday.

For the corresponding period last year, the fiscal deficit was 32 per cent of the full year target.

A government website showed the fiscal deficit at the end of July was Rs 586.28 billion ($12.44 billion), more than half of the target of Rs 1.16 trillion, or 4.7 per cent of GDP, set for the full year (April-March).

The data suggests India may again miss its fiscal deficit target for the year, leaving little hope that global rating agencies may revise India's debt which currently has a junk bond status.

Despite the comparatively slower start last year, the government still missed its fiscal deficit target of 5.1 per cent of GDP, ending the year with a figure of 5.2 per cent.

Earlier this month, global rating agencies Standard & Poor's and Moody's Investors Service cited India's stubbornly high fiscal deficit as a reason for downgrading the country's rating and outlook.

The deficit level was also criticised in an IMF study and in the central Reserve Bank of India's annual report.

The data showed sluggish tax revenues, which at Rs 236.99 billion, represented just 14.5 per cent of the full year target. Expenditure, on the other hand, totalled Rs 943.33 billion or 25.1 per cent of the full-year target.

Analysts believe the tax revenue target may be difficult to reach this year due to slower economic growth. Indian economic growth has slowed for two years in a row -- GDP grew 5.2 per cent in 2000-01 from 6.4 per cent and 6.6 per cent in the previous two years.

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