Taking into account a likely shortfall in revenue and off-budget spending, the real fiscal deficit could be as high as 5.5% of GDP in the current fiscal
Mumbai: As India’s economic slowdown has intensified, so has the debate on whether the government should stick to fiscal consolidation or run a higher deficit to push growth in the upcoming budget, due on 1 February.
However, data on revenue available so far suggests that the government has very little fiscal space for any significant growth stimulus. If the government’s off-budget liabilities (or withheld payments) are taken into account, the central government’s real fiscal deficit could end up being as high as 5.5% of gross domestic product (GDP) in the current fiscal year, a Mint analysis of public accounts suggests.
This is significantly higher than what the last budget, presented in July, had projected (3.3%) and significantly above the fiscal deficit threshold mandated by law.?
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