India’s Fiscal Deficit May Breach 5.9% Of GDP Target: India Ratings And Research

Syllabus: GS-III

Source: Indian Express

Subject: Indian Economy.

Topic: Growth & Development

Issue: Fiscal Deficit Breaching GDP target.

Context: India faces a potential fiscal deficit exceeding the targeted 5.9% of GDP, reaching 6%, according to India Ratings and Research.

Fiscal Deficit Projection:

The main reason for exceeding the target is anticipated to overspend in revenue, surpassing the budget estimate by ₹2 lakh crore.
Total spending for 2023-24 now stands at ₹6 lakh crore, Encompassing revenue and capital expenditures.
Parliamentary approval was secured for the first supplementary demand for grants. Additional cash outgo of ₹53,378 crore.
First supplementary demand aimed at priority areas: food, fertilizer, LPG subsidy, MGNREGS.
Expectation of a second supplementary demand for grants with a potential increase in revenue expenditure to ₹1 lakh crore.
Higher spending by specific ministries was identified as a key factor.
Effort to recoup ₹28,000 crores to the Contingency Fund of India.

Conclusion:

Reflects challenges in maintaining fiscal discipline. Highlights the need for careful budgetary management strategies.

Background

Credit Rating Agencies in India:

India has seven registered agencies, including CRISIL, CARE, ICRA, SMREA, Brickwork Rating, and India Rating and Research Pvt. Ltd.
These agencies evaluate financial strength, focusing on the ability to meet debt obligations and offer crucial information about issuers of bonds, including government entities and companies.
Globally Credit rating agencies are Dominated by three major agencies: Moody’s, Standard & Poor’s, and Fitch.

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