Govt seeks parliamentary approval for more spending

NEW DELHI Fri Dec 7, 2012 1:24pm IST

A worker at a fuel station checks a 500 Indian rupee note after filing a vehicle with fuel in Kolkata February 3, 2011. REUTERS/Rupak De Chowdhuri/Files

A worker at a fuel station checks a 500 Indian rupee note after filing a vehicle with fuel in Kolkata February 3, 2011.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

NEW DELHI (Reuters) - India sought to spend an extra 308.4 billion rupees in the current fiscal year ending March 2013, as expected, to meet its upwardly revised fiscal deficit estimate though it assured there will be no extra borrowing.

However, market participants expect the fiscal deficit to rise above the government's new target of 5.3 percent of GDP due to sluggish revenue collection from its telecom auction and divestments which could force the government to borrow more.

"The extra borrowing is not a function of only the increase in spending, but also of revenues shaping up," said A. Prasanna, economist at ICICI Securities Primary Dealership.

"There is still a possibility of additional borrowing, whether it is through T-bills, or dated securities, we need to see. The earliest we could know will be in the last week of December when they announce the calendar for T-bills auction."

Most economists expect the government to end the fiscal year with a fiscal deficit of 5.6-5.8 percent which could mean an additional borrowing of 300-500 billion rupees.

The government has said it will borrow 5.7 trillion rupees through federal government securities in 2012-13 ending March.

"We don't think at the moment there is a need to borrow anything more than what has been indicated," Finance Minister P. Chidambaram told reporters after seeking approval from parliament for the additional spend.

India's fiscal deficit is the widest among many emerging economies due to huge subsidy-based spending.

Ratings agency Fitch warned on Monday it could cut India's sovereign rating if the government loosens fiscal policy in the run-up to the election, due by 2014, or sees a more prolonged slowdown in economic growth.

The fiscal deficit during the April-October period rose to 3.68 trillion rupees, or 71.6 percent of the budgeted fiscal year 2012/13 target.

(Reporting by Manoj Kumar, additional reporting by Neha Dasgupta; Writing by Suvashree Dey Choudhury; Editing by Jacqueline Wong)

FILED UNDER:

Monetary Policy Committee

Reuters Showcase

Microfinance

Microfinance

Funding the unfunded: India helps small business borrow to grow  Full Article 

Insurance Sector

Insurance Sector

UK healthcare firm Bupa sees strong growth in India  Full Article 

Sensex Rises

Sensex Rises

Sensex edges up; consumer and healthcare stocks rise  Full Article 

Market Eye

Market Eye

FTSE adds nine Indian firms as large-caps in Asia-Pacific ex-Japan index   Full Article 

Indian Ocean Diplomacy

Indian Ocean Diplomacy

PM Modi to ramp up help for Indian Ocean nations to counter China influence  Full Article 

ECB Bond-Buying

ECB Bond-Buying

ECB raises growth forecasts, to start printing money next week  Full Article 

China Economy

China Economy

China signals "new normal" with lower annual growth target  Full Article 

Pharma Sector

Pharma Sector

Panel recommends waiving late-stage trials for some drugs  Full Article 

E-commerce

E-commerce

China backs e-commerce expansion in win for Alibaba, JD.com  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage