Goldman Sachs sees India deficit at 5.8%

NEW DELHI: Goldman Sachs has revised India's fiscal deficit estimate for the current fiscal, citing worsening of fiscal and monetary policy mix. In a report on Thursday, Goldman Sachs has said its expects India's fiscal deficit at 5.8% of GDP, against 5.5% estimated earlier.

The government has budgeted a fiscal deficit of 4.6% of GDP, but on Wednesday Finance Minister Pranab Mukherjee admitted that meeting the target will be difficult.

"The government's finances are deteriorating. We now think the fiscal deficit in FY12 may rise to 5.8% of GDP, compared with the budgeted 4.6%, largely due to a slowdown in revenues," said Tushar Poddar, Prakriti Shukla, Vishal Vaibhaw of Goldman Sachs in a note.

The major concern remained the downside risks to GDP growth and slowdown in revenues.

The report titled 'India: A worsening of the fiscal-monetary policy mix' says that in the first half of the fiscal year 60% of the tax collections take place.

However, in the first half of FY12, gross tax collections have grown by only 14.8% compared to the full year budgeted growth of 18.5%.