India to breach deficit target as GST impact felt
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India will breach its fiscal deficit target of 3.2 percent of GDP for the financial year ending on March 31, with deficit now projected to be a larger 3.5 per cent of GDP.
Arun Jaitley, the finance minister, also set a fiscal deficit target of 3.3 percent of GDP for the coming year, a further push-back of its previously announced fiscal consolidation road-map.
Unveiling the budget for the coming year, Mr Jaitley said the revenue raising this year had been hit by the transition to the Goods and Services Tax, and a shortfall in non-tax revenues due to factors such as the delay in the auction of telecom spectrum.
In its earlier fiscal consolidation road-map, the government had pledged to reduce the fiscal deficit target to 3 percent of GDP in the coming year, after pushing it back by two years earlier.
Mr Jaitley gave no commitment as to when the government may bring the deficit down to 3 percent of GDP.
Some economists have expressed concerned that New Delhi could overshoot even a softer fiscal deficit target this year, given the compulsions for higher spending in a pre-election year.
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