Fiscal Deficit to Be Closely Monitored By the Rating Agencies
- Congress Party will be looking to give away election year sops to woo their voters. At the same time, the performance of the Finance Ministry will be closely monitored by the Global Rating agencies. They will basically look into incomes generated with government spending.
- If the Finance Ministry targets fiscal deficit of 4.5% based on Kelkar Committee’s recommendation, then the budget will clearly show huge increase in government borrowings.
- The government is more likely to present the 4.5 % fiscal deficit, in order to stay align with fiscal road map by Kelkar Committee in 2014-15. This means that there will be steep increase of 17% in the gross borrowings amounting Rs 6,70,000 crore.
- If the government achieves the target of 4.8% in 2013-14 and aims the next years at 4% of GDP, then the gross borrowing can go down to Rs. 6,15,800 crore.
Exams Perspective:
- Kelkar Committee recommendation on fiscal consolidation
- FRBM Act
- fiscal deficit