Rating agency ICRA has said that the fiscal deficit may increase in 2021-22 due to the miss of disinvestment target.
Mumbai:
Rating agency ICRA said in a report that lapse in disinvestment target could push the government’s fiscal deficit to Rs 16.6 lakh crore or 7.1 per cent of GDP in the current fiscal.
The agency said in a report that the fiscal deficit of state governments is projected at a relatively modest 3.3 per cent of GDP in 2021-22, with the general government fiscal deficit at around 10.4 per cent of GDP.
In the base case for 2022-23, the agency sees the government reducing the fiscal deficit to Rs 15.2 lakh crore, or 5.8 per cent of GDP.
Although the planned discontinuance of GST compensation may increase the fiscal deficit of state governments to the extent of 3.5 per cent of GSDP set by the Fifteenth Finance Commission, the general government deficit will come down to 9.3 per cent of GDP in 2022. -23, it said.
ICRA Chief Economist Aditi Nair said with a clear jump in tax collections, the government’s gross tax receipts are expected to exceed the budgeted amount by Rs 2.5 lakh crore in FY22.
However, net tax revenue gains to the government would be offset by the expected large shortfall on receipts from disinvestment and back-ended spending, particularly on items that were included in the second supplementary demand for grants, such as food and fertilizer subsidies, air Equity infusion in India Assets Holding Ltd., etc., she said.
“As a result, we expect the government’s fiscal deficit to be Rs 16.6 lakh crore in FY22, which is higher than the budgeted amount of Rs 15.1 lakh crore,” Ms Nair said.
Ms Nair said the Union Budget for 2022-23 will face some hurdles, due to an expected slowdown in growth in indirect taxes after the recently provided excise duty relief, and a drop in nominal GDP growth from 17.5 per cent to about 12.5 per cent. percentage has decreased. 100% expected in the current financial year.
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