Fiscal deficit exceeds forecast: Fitch

Numbing Numbers

♦ Fitch gave 'BBB'/Negative sovereign rating to India in Nov

♦ Fitch predicted 6.6% fiscal deficit

♦ FM put it at 6.9%

♦ Planned 6.4% deficit for FY23 also higher than its previous 6.1% forecast

New Delhi: India's budget for the fiscal beginning April 2022 focuses on giving a boost to the ongoing economic recovery through a sharp increase in capex spending, but is short on major growth-enhancing structural reform announcements, Fitch Ratings said Wednesday.

The deficit targets present in the Union budget 2022-23 by Finance Minister Nirmala Sitharaman on Tuesday 'are a bit higher than our forecasts when we affirmed India's 'BBB'/Negative sovereign rating in November," said Jeremy Zook, Director and Primary Sovereign analyst for India, Fitch Ratings. While it was widely expected that the fiscal deficit will be lower than the targeted 6.8 per cent of the GDP in the current fiscal year ending March 31, 2022, Sitharaman put the number at 6.9 per cent.

"Our expectation of modest fiscal outperformance in (current) FY22 from last year's budget target appears unlikely to materialise, with the budget flagging a revised deficit of 6.9 per cent of GDP against our 6.6 per cent forecast," Fitch said. "The planned 6.4 per cent of GDP FY23 deficit is also higher than our previous 6.1 per cent forecast."

Sitharaman's Rs39.45-lakh crore Budget envisages higher spending on highways to affordable housing to fire up the key engines of the economy to sustain a world-beating recovery from the pandemic.