India reaches its fiscal deficit target with 3 months to spare

The data released by Ministry of Finance's Controller General of Accounts (CGA) showed that the fiscal deficit crossed the Interim Budget's target of Rs 5,31,177 crore. 

In other words, the fiscal deficit till the end of December 31, 2014 stood at 100.2%, or Rs 5.32 lakh crore of the budgeted estimate by the NDA government. 

The total expenditure of the government, however, came in at Rs 12.36 lakh crore, or 68.9% of the estimate. 

With two months to go for the fiscal to end, the government's earnings, or receipts, stood at 55.7% of the budget estimate as against 57.7% in the corresponding period of previous fiscal.

The government has also been also cut down its expenses as the non-plan expenditure stood at 72.4% of the targeted Rs 12.19 lakh crore and planned expenditure came in lower at 61.3%. 

Finance Minister Arun Jaitley is confident that the government will be able to contain fiscal deficit at its targeted 4.1% of the total GDP by the end of March 31, 2015. 

This task, nonetheless, doesn't look difficult. 

With oil sharply down over the past few months, the subsidy outflow to the oil marketing companies has also come down helping the government to stem the outflow of cash. 

Moreover, the 10% stake-sale in Coal India has already netted the government Rs 22,600 crore. With ONGC's disinvestment to follow and the year-end target of Rs 41,000 crore, it seems that the government will comfortably raise the required money from disinvestment. 

Earlier this week, the government approved base price of Rs 3705 crore per megahertz for 3G spectrum which will get its kitty swelled up by another Rs 17,500 crore. 

Combined with the proceeds from 2G spectrum sale, the government aims to net over Rs 1 lakh crore. 

With these big ticket revenues still in the pipeline, the government looks comfortably placed in achieving its fiscal deficit targets. 

This indeed gives it room to set higher targets for the following year. 

Given the fact that fiscal deficit target for last year was 4.6% and this year it is at 4.1%, the government will look to cut its deficit further in the upcoming budget. 

The lower oil prices will also give the government necessary space to curtail its expenses. 

The Expenditure Management Commission, headed by Bimal Jalan has already suggested that the government should aim to contain its fiscal deficit at 3.6% of the GDP in 2015-16. 

Given the current macroeconomic scenario, this target looks fairly in reach.