The Finance Insider blog

Search This Blog

Blog Archive

The Finance Insider

Monday, December 10, 2012

The Union Budget that is presented on the last day of February every year may soon earn the title of 'national joke'. Throughout the year, the Finance Ministry keeps revising its budget plans and deficit estimates. This year is no exception. Rather, frequent revisions of estimates and targets have become the norm.

As per an article in Business Standard, the government is likely to spend additional Rs 308.4 bn to meets its revised fiscal deficit estimate of 5.3%. But do not be surprised if the Finance Ministry revises its deficit estimate still higher. It is not just higher government expenditure that is the culprit. Failure on the revenue front is also to blame. The 2G spectrum auction was a damp squib. The divestment of stake in PSUs has not worked out as per plan. This is the reason why most experts are of the view that the fiscal deficit could go as high as 5.6-5.8% by fiscal end. This, in turn, would result in additional borrowing of Rs 300-500 bn. Will this result in a rating downgrade for th e Indian economy? The warnings h ave already started pouring in.

No comments:

Post a Comment