1. Revenue: Govt may need to resort to spending cuts, says Kamlesh Rao

Revenue: Govt may need to resort to spending cuts, says Kamlesh Rao

The fiscal deficit has come in at Rs 5.32 lakh crore during April-December of 2014-15, surpassing a full-year’s BE of Rs 5.31 lakh-crore by 0.2%...

Published: February 1, 2015 4:05 PM
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Markets fell on the last day of the week largely on the back of worse-than-expected asset quality numbers declared by banks – both public and private. (Reuters)

“The fiscal deficit has come in at Rs 5.32 lakh crore during April-December of 2014-15, surpassing a full-year’s BE of Rs 5.31 lakh-crore by 0.2%. For the corresponding period last year, the deficit was 93.9% of the full-year BE. The higher deficit is largely because of the lower-than-expected revenues. For the first nine months of 2014-15,  tax revenue of the Centre has been Rs 5.45 lakh-crore, about 55.8% of the full-year BE of Rs 9.77 lakh-crore. For April-December last year, it was higher at 58.6% of the full-year target. Expenditure for the period stood at 68.9% of BE as against 69.9% in the corresponding period of FY14.

Going ahead, there are tail winds for the revenues in the form of higher dis-investment proceeds (including CIL), telecom spectrum sale and further income from the hike in excise duties for petro and diesel. Apart from these, the last quarter normally sees a large proportion of tax revenues accrue to the Government. However, in case of a revenue shortfall, the Government may need to resort to spending cuts, with a view to meet the fiscal deficit target of 4.1%.

Separately, the CSO has released the revised GDP numbers for the past two years, taking 2011-12 as the base year. The revisions happen every 5 years. The 2012-13 GDP growth has been revised to 5.1% from 4.5% earlier and the 2013-14 number has been revised to a substantial 6.9% as against 4.7% earlier. This will increase the size of economy.

Markets fell on the last day of the week largely on the back of worse-than-expected asset quality numbers declared by banks – both public and private. The Coal India OFS attracted bids of 1.2x the size of the issue and that entailed an amount of about Rs.240bn.”

By Kamlesh Rao, CEO, Kotak Securities

  1. S
    Suraj Singh
    Feb 2, 2015 at 11:06 am
    Acche din aa e .... revenue are going down and government is riding on dis-investment just to save their face.
    Reply

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