The government can meet the 6.4% budget deficit target for 2022-2023 if there are no cuts in excise duties to bring down high oil prices and additional spending on subsidies, it said. said a German brokerage on Thursday.
It will be possible to meet the budgeted target if there is no further reduction in excise duties, said Deutsche Bank chief economist Kaushik Das.
The note says recent cuts in excise duties, coupled with increased spending on fertilizer, food and fuel subsidies, have posed “upside risks” to the fiscal deficit target.
“…our analysis of the fiscal arithmetic at this point suggests that the central government can still potentially keep the fiscal year 23 fiscal deficit close to the 6.4 percent of GDP target, assuming no There will be no further excise duty reductions or/and additional spending on subsidies beyond what has already been announced,” he said.
However, it will be a “different story” if crude oil prices rise above $150 a barrel during the year, he said, hinting that the fiscal deficit could otherwise exceed target levels.
The brokerage said its internal view was that the budget deficit figure stands at 6.5% of GDP.
Clarity on whether the fiscal target can be met or not, and whether market borrowing should be increased from the current target of Rs 14.31 lakh crore will only become clearer in the second half of fiscal year, when the government will have sufficient revenue data. and the spending front, he said.
Listing the factors which raise concerns about the fiscal situation, he said the government had reduced the central excise duty on petrol by Rs 8 per liter and diesel by Rs 6 per litre, the expenditure allowance on fertilizer subsidies was increased by Rs 1.1 lakh crore and a Rs 61,000 crore program on cooking gas was also announced.
The note noted that actual revenue collection was higher than the revised estimates for FY22, which will help achieve revenue estimates for FY23 in absolute terms, but added that actual expenditure was also found to be higher than estimated.
In FY23, the total revenue collected may be around Rs 24,500 crore lower, given the impact of the measures enlisted above, he said, adding that the expenditure cut is still likely to be lower than the further increase in the subsidy bill of Rs 2 lakh crore, meaning we should expect an overall spending overrun of at least Rs 1.3 lakh crore, he said. -he declares.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)