Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Fiscal deficit served with some fudge
Mon, 5 Nov Pre-Open

Prime Minister Manmohan Singh cautioned about the high fiscal deficit levels as they actas a deterrent for domestic and foreign investment. He opined that respective ministers should help inresolving issues related to aspects that are 'dragging' the economic and infrastructural growth. These drags include fuel supply arrangements, security & environment clearances and financing issues.

As reported by the Business Standard recently, the fiscal deficit - the difference between the government receipts and spending - during the six month (April to September) period ended September 2012 reduced by 65.6% of the budget estimate.

However, what is interesting that this figure is 'believed' to be lower by 0.1% as compared to the figure of 65.7% of budgeted deficit during the first five months (April to August) of the year. This indirectly indicates that there was no deficit in the month of September 2012.

If this continues to be the trend for the rest of the year, then the government does not really have areason to worry. But as reported by firstpost.com, the figures are seemingly fudged! This is because the government has held back overdue subsidy payments. The expenditure part of the fiscal deficit has beena lower figure there by keeping the overall fiscal deficit as a percentage of the budgeted target lower. It is believed that the finance ministry has not paid the oil marketing companies (OMCs) dues of about Rs 700 bn (excluding of what subsidies other energy companies would be needed to pay up) of subsidies that were due to them for the first half of the current year.

OMCs - Indian Oil Company, Bharat Petroleum Corporation Ltd. and Hindustan PetroleumCorporation Ltd - have reported under-recoveries of about Rs 856 bn during 1HFY13. The government would mostly likely be pressurized to pay these dues soon, else the OMCs would report massive writeoffs from their books, similar to what has taken place in the quarter ended June 2012.

Keeping all the above in mind and after including the payments of Rs 700 bn in the calculation of subsidies, the fiscal deficit figure comes to Rs 4,060 bn, which is about 79% of the budgeted estimate of fiscal deficit target of 5.3%. Given that we are only six months in the financial year, it is anyone's guess what it would be at year end.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Fiscal deficit served with some fudge". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

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.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (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, Canada or the European Union countries, 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.