Sep 2, 1999|
Fiscal deficit worries resurface
According to newspaper reports, India's fiscal deficit (including all small savings) at the end of July has ballooned by over 28% as compared to the same period in 1998-99. The reason for the jump in deficit is that while expenditure grew by 16%, the net revenue receipts grew by a meager 1%. The government has projected a fiscal deficit of 4% in FY2000 (5.2% on the basis of old accounting method).
However, as per government estimates, the picture is much better. This is so because, from this year onwards, small savings, which were earlier treated as capital receipts, will now be netted out. Under the new scheme according to the RBI Annual Report (1998 – 99):
The Union Budget for FY 2000 has proposed to change the accounting system so that small savings collections would be credited to 'National Small savings Fund' in the Public Account. All withdrawals and disbursals would be made out of the accumulation of the fund. All investments in Central Government securities out of the fund would form a part of the Central Government's internal debt. Due to this change, non-plan expenditure of the Centre is budgeted to be lower by Rs 250 bn in FY2000, which is reflected on the fiscal deficit.
The deteriorating fiscal position is a cause for concern for all. This is so because, if the situation fails to improve, the government would have to continue to borrow funds from the market. In all probability, the government will exceed its borrowing target as in the previous year (34% over the Revised Estimates). This could lead to a hardening of interest rates in the markets and thus adversely affect investment and consumption activity. Moreover, the situation is of concern as it implies that taxes have failed to register growth. This means that corporate profitability is yet to pick up, again denting the prospects of an economic recovery.
More Views on News
Jul 25, 2017
Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?
May 27, 2017
What happens when minority shareholders are short-changed in the normal course of business?
Feb 15, 2017
PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.
Aug 24, 2016
And here's your chance to claim a free copy of this book...
Aug 12, 2016
And Why India's demographic dividend could turn out to be a doubtful debt...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407