Fitch Solutions Expects India To Breach Fiscal Deficit Target In FY22

India is likely to breach its fiscal deficit target in the financial year to March 2022 mainly due to revenue shortfall, Fitch Solutions in a report by PTI.

The government is targeting a deficit between revenue it earns and what it spends at 6.8 per cent of the gross domestic product (GDP) in FY22 (April 2021 to March 2022).

“We at Fitch Solutions forecast the Indian central government deficit to come in at 8.3 per cent of GDP in FY22,” it said.

“Revenue shortfall remains the main driver of our wider deficit view, as we expect the government to maintain its spending targets.”

Fitch Solutions had previously projected a fiscal deficit of 8 per cent.

“The main driver of our deficit forecast revision is a downward revision to our outlook for revenues, given that the flare-up in COVID-19 cases in India and containment measures in place will hamper India’s economic recovery, which will have a negative impact on fiscal revenues,” it said.

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