India's fiscal deficit has reached 68 per cent of its full-year target at the halfway stage, revealing strains to Finance Minister Arun Jaitley’s budget as revenues from asset sales again fall short.
Even though falling oil subsidy costs and curbs on spending should help Mr. Jaitley hit his borrowing target, he warned this week that it would be a challenge to collect the 695 billion rupees ($10.66 billion) from sell-offs he has budgeted for.
The April-September fiscal deficit totalled 3.79 trillion rupees, or 68.1 per cent of the full-year target, data released by the Controller General of Accounts showed on Friday.
Net tax receipts stood at 3.7 trillion rupees in the first half of the fiscal year to March 2016, while total spending touched 9.1 trillion rupees.
That mismatch reflects that spending is typically front-loaded, while revenues peak late in the year.
Still, weak proceeds from sell-offs of state assets are putting Mr. Jaitley’s fiscal arithmetic to the test.
So far, he has raised only 127 billion rupees from the sale of shares in state companies, less than one-fifth of the annual target.
Some Finance Ministry officials say the target could soon be slashed by half, and cash-rich state companies such as Coal India pressed instead to pay higher dividends to plug the gap.
Prime Minister Narendra Modi's government faces a revenue shortfall of up to 500 billion rupees in direct tax receipts, estimated at 7.98 trillion rupees for the 2015/16 year to March.
