CRISIL said Fiscal deficit to touch 5.2% in FY14

Fiscal deficit to touch 5.2% in FY2014 : Report by CRISIL.

Created On: Dec 24, 2013 18:08 ISTModified On: Dec 24, 2013 18:10 IST

Ratings agency CRISIL (Credit Rating Information Services of India Limited) on 24 december 2013  said government’s fiscal deficit would touch 5.2% during current Fiscal , above the target by 0.40%.

In the Union Budget 2013-14 , government had set the target to curb the fiscal deficit by 4.8%.

The Centre can reduce its fiscal deficit by as much as 20000 crore rupees this fiscal by using cash reserves of public sector units.

The top 20 public sector undertakings will have a cash reserve of  160000 crore rupees by March 2014 and are comfortably placed to pay a special dividend.

The public sector undertakings considered for this report include Bharat Electronics, Bharat Heavy Electronics, Bharat Petroleum Corp, Coal India, Container Corporation, Engineers India, Gail, MMTC, MOIL, Nalco, Neyveli Lignite Corp, NHPC, NMDC, NTPC Ltd, Oil India, Oil and Natural Gas Corporation, Power Grid Corporation, Shipping Corporation, SJVNL, and Sail.
About Crisil
CRISIL - Credit Rating Information Services of India Limited.CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services.CRISIL’s majority shareholder is Standard & Poor's, a division of McGraw-Hill Financial and provider of financial market intelligence.

Its rating capabilities span the entire range of debt instruments and it has worked across the corporate strata, from large corporates in the country to the SMEs.

What is fiscal deficit
Fiscal deficit is the difference between the government’s expenditures and its revenues (excluding the money it’s borrowed). A country’s fiscal deficit is usually communicated as a percentage of its gross domestic product (GDP).

What are the causes of fiscal deficit
Government spending
lower revenue
Slow economic growth
Sluggish economic activities

How fiscal deficit can be bad for India

A large fiscal deficit is an indication that the economy is in trouble and will have reasons to worry. A high fiscal deficit could pose an inflation risk, minimize the growth of the economy, doubt the government’s abilities; it could affect the country’s sovereign rating, which in turn will limit foreign investors from looking at India as one of the investment hubs.

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