India May Relax Fiscal Deficit Target This Year: Capital Economics -- Market Talk
7 September 2016, 04:31
0431 GMT [Dow Jones] India may relax its fiscal deficit target this year as potential expenditures could outpace planned revenue collection, mainly on account of the recent wage revision of the federal government employees and pensioners. "This is unlikely to materially impact public debt levels, but it will have a bearing on monetary policy," says Shilan Shah of Capital Economics. A loosening of the [fiscal deficit] target would provide less scope for easing of interest rates, says Shah. India aims to reduce the fiscal deficit to 3.5% of the gross domestic product this financial year as compared with 3.9% in 2015-16. Latest data shows a rapid expansion in the deficit during the first four months ended July, reaching 75% of the total amount budgeted for 2016-17. The rise is mainly attributed to the government's increased spending at the start of the year, while revenues usually come towards the year-end. (rajesh.roy@wsj.com; Twitter: @rovingrajesh)
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September 07, 2016 00:31 ET (04:31 GMT)
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