Fiscal deficit to be around 5.2% in FY14: CRISIL
As per ratings agency CRISIL, government will miss its 4.8% fiscal deficit target by 0.40% this fiscal 2013-14 and suggested Public Sector Units (PSUs) should dip into their cash reserves to reduce the gap by paying extra dividends.
As per the rating agency, taking into account the current scenario, wherein the front loading of expenditure has resulted in 84.4% of the budgeted fiscal deficit target being hit by November 2013, the fiscal deficit is expected to touch 5.2%. As per CRISIL, the government can narrow down its fiscal deficit by as much as Rs 20,000 crore this fiscal by using cash reserves of PSUs. The agency says that top 20 PSUs will have a cash reserve of Rs 1,60,000 crore by March 2014 and are “comfortably placed” to pay a special dividend of 40% of the corpus (Rs 64,000 crore) without impacting growth plans. This amount will be Rs 27,000 crore more than the dividend paid by the companies in 2012 and after calculating the stake of the government in the firms, will lead to excess revenue of Rs 20,000 crore. This Rs 20,000 crore extra income would make around 20 basis points of the fiscal deficit, which can help the government reach nearer to its stated fiscal deficit target of 4.8%. The agency expressed concerns over the revenue collections from the taxation and also about the Government not being able to reach its Rs 40,000 crore divestment target.