Mumbai: The coronavirus pandemic will impact sectors like trade, hotels, transport and communication and push India's fiscal deficit to 3.88 per cent of GDP this fiscal, a report said.
According to SBI Research's Ecowrap report, the month of March is severely affected by travel and transport curbs, which will have a spillover effect on growth.
"Even COVID-19 will have an impact on GDP through Trade, Hotels, Transport, Communication & Services related GDP. As the March month is severely affected by travel and transport curbs, we believe that Q4 nominal GDP may impart a 1.4 per cent decline in FY20 GDP.
"Thus, considering the impact of COVID-19 on GDP, the new fiscal deficit will be 3.88 per cent of GDP," the report said.
The government had raised the fiscal deficit target to 3.8 per cent of the GDP from 3.3 per cent pegged earlier for 2019-20 due to revenue shortage.
According to the report, based on current tax revenue trends, additional expenditure rationalisation of Rs 1.2 lakh crore might be required in the current fiscal if India has to stick to the mandated 3.8 per cent fiscal deficit target.
