Reputed rating agency Crisil today reveals that the Government of India
is not at all likely to complete its revenue growth target, which it had set
for itself, for the next fiscal year due to it’s over ambitious estimation from
spectrum sale and disinvestment of the PSUs.
In a very latest report, in which it had studied the overall Indian
economy completely, Crisil said, “We believe the
government is likely to miss the revenue growth target of 23.4 per cent in
2013-14 as investment and spectrum sale targets are too ambitious."
Crisil added the expected estimation of the Indian Government to collect
revenue of Rs 58,000 crore from disinvestment and Rs 40,000 crore from the
sales of spectrum will be quite a tough nut to break. It will be very difficult
to achieve such high targets, it said in its report.
The report clearly mentioned that to achieve the target budgeted revenue
and expenditure will be a not-so-easy task to do. India is having a very poor
GDP figure as of now, and along with that next year will be the year of Lok
Sabha election, which will make the target more difficult, sort of impossible
to achieve.
However Crisil did mention that the proposed fiscal consolidation would
be able to create a sustainable environment, and it will be an added plus
factor as Reserve Bank of India may cut the interest rates to support the
overall growth. The fiscal consolidation could hurt the growth factor in the
short run only.
Earlier Crisil forecasted that the GDP figures of India Inc. will be
6.4% (growth) for the next fiscal, and in its latest report it eventually
retains that, saying that expecting more than that is highly unlikely
considering the present scenario. I already posted that IMF
predicts India’s FY13 growth rate to 5.4%.
"As budgetary proposals are
broadly in line with our expectations, we retain our pre-budget forecast of 6.4
per cent GDP for 2013-14, which is the midpoint of the GDP growth range (6.1 to
6.7 per cent) that the budget has assumed," Crisil added in its report.
Crisil, the reputed rating agency, assured that the inflation would
surely decline in the next financial year. It said that the WPI inflation will
have an average of around 6.5% because of the several factors including the low
crude oil price in the global market. There are other factors too that will
help to control inflation such us lower core inflation and gradual strengthening
of Indian rupees. You may like to read Current Economic News
in India here.
Crisil said that the extra market borrowings for this fiscal would be
able to create a tremendous pressure on 10-year G-Sec yields. It has to be mentioned here that the Indian
Government will borrow Rs 4.84 trillion in the next financial year from
the market compared to Rs 4.67 trillion in the current fiscal year.
"However, we expect a lowering of the repo rate by 50-75 bps during
the rest of 2013-14, due to lower inflation. This will lower the floor for the
G-Sec rate and soften yields to around 7.7-7.8 per cent by March-end
2014," it concluded in its report.
The good news that as per the Crisil report Indian rupee will settle
down around
51-52 per dollar by the end of March 2014.
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