New Delhi: India’s fiscal deficit touched 95.3% of its full-year target in the six months ending 30 September because of lower revenue receipts, adding to concerns that the government may miss its deficit target of 3.3% of GDP.

The government had exhausted 91.3% of its full-year fiscal deficit target in the same period last year.

The main source of stress in revenue receipts comes from lower receipts from stake sales in central public sector enterprises (CPSEs).

Against a full-year target of 80,000 crore, government has till 30 September divested only 9,945 crore worth of CPSE equities. This is 12% of the full-year target while last year during the same period, government had achieved 34% of its target.

The likelihood of meeting the budgeted revenue targets related to the goods and services tax (GST), dividends and profits, and disinvestment, and expenditures such as the adequacy of outlays for revised minimum support prices, the Ayushman Bharat scheme, fuel and other subsidies, and bank recapitalisation would determine whether a fiscal slippage emerges relative to the budgeted level for FY2019, said Aditi Nayar, principal economist at Icra Ltd.

“A considerable 90% of the 2018-19 budget estimate for fuel subsidies has been released in the first half of the year. With the rise in crude oil prices and the depreciation of the rupee, the gross under-recoveries of the oil marketing companies for the ongoing fiscal are estimated to exceed the budgetary allocation for fuel subsidies, exerting pressure on the overall fiscal deficit target," she added.

Rating agency Moody’s Investors Service earlier this month said the government’s decision to cut excise duty on fuel prices will increase its fiscal deficit and is a negative to the country’s sovereign credit rating.

Out of the 2.50 price cut in diesel and petrol prices, the centre reduced excise duty by 1.50 per litre, while state-run fuel retailers took a hit of 1 for every litre sold.

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