Subhash Chandra Garg
Subhash Chandra Garg

Mumbai: The Indian government's fiscal deficit is likely to be around 3.7%-4.0% of GDP in the current financial year ending March, because of a huge shortfall in tax and divestment receipts, according to former finance secretary Subhash Chandra Garg.

The fiscal deficit for 2019-20 is likely to overshoot the target by 1.3 trln to 2.0 trln rupees, Garg wrote on a post on his blog. The Budget for 2019-20 had projected fiscal deficit of 7.04 trln rupees or 3.3% of GDP.

The government's tax collections in 2019-20 are likely to fall short of the target by 2.0 trln rupees, while disinvestment receipts may fall short by 500 bln rupees, Garg, who was the finance secretary when the government presented the 2019-20 Budget, wrote on the blog.

Garg took voluntary retirement from government service following his shock transfer to the power ministry two weeks after the presentation of the Budget.

The government could get additional revenue of 500 bln rupees in 2019-20, primarily on account of a favourable Supreme Court order on adjusted gross revenue of telecom companies, he wrote.

Garg said the government is likely to continue off-Budget financing this year, including loans from the National Small Savings Fund to Food Corp of India.

According to Garg, the real fiscal deficit in 2019-20, including off-Budget financing like recapitalisation of banks, loan to Food Corp and government-serviced bonds, is likely to be in the region of 4.5-5.0% of GDP.

As per Controller General of Accounts data, the government's fiscal deficit at the end of November was 115% of the full year's target.

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