Core sector output fell harder in August; government retains ₹12-lakh-crore borrowing plan; Current account surplus widens to $19.8 billion in Q1.
India’s fiscal deficit went further past the Budget target of nearly ₹8 lakh crore in the first five months of 2020-21, touching ₹8.7 lakh crore or 109.3% of the deficit target. Revenue receipts stood at just 18.3% of the Budget targets, while expenditure touched 41%.
Core sector output fell harder in August than July, contracting 8.5% compared to a year ago, indicating that a recovery remains elusive. The plan to raise ₹2.1 lakh crore from disinvestment is waylaid, even as the Finance Ministry extended the deadline for bids to buy BPCL by two months. The Centre held off any expansion of its proposed borrowings of ₹12 lakh crore, with Economic Affairs Secretary Tarun Bajaj stating that revenues are picking up with re-opening of economy. The Finance Ministry expects to manage the year’s spending while ‘keeping some space for some unforeseen expenditure items,’ he said.
Rating agency ICRA expects the deficit to shoot further to ₹14 lakh crore by the end of the fiscal, compelling the Centre to enhance its borrowings by at least ₹1.1 lakh crore.