"The (Indian) government had estimated that last year's fiscal deficit was contained at 4.6 per cent, lower than the 4.8 per cent goal. However, the trends between April 2013 and February 2014 belie that optimism," the Singaporean brokerage firm said in a note.
"The final deficit could be adjusted higher when the numbers are available in late May," it said.
DBS said that during the first 11 months of the 2013-14 fiscal ended on March 31, only 76 per cent of the tax revenue collection target could be achieved, while on the expenditure front, the same number stood at 88 per cent.
The final fiscal deficit figure would move up to 4.8-4.9 per cent, it said, adding it is a "conservative estimate" going by way in which the tax and revenues have performed.
Since 2012-13, Finance Minister P Chidambaram has been forced to take the fiscal consolidation target very seriously, driven majorly by global agencies' threats of a downgrade in India's credit rating.
DBS, however, said the markets may not react adversely to any upward revision after the release of final figures as by that time they will be focusing on the new government's fiscal priorities.
The first of new government will be a litmus test, it said, suggesting that the government should go in for a more realistic target, which may be around 0.2-0.3 per cent more than the number of 4.1 per cent defined in the interim Budget in February.
It said: "The rating agencies and the markets, however, will tolerate the marginal increase in the target, provided the government factors in realistic assumptions and appears serious in its intent to adhere to targets."