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Reuters
New Delhi, Sept 20: The Government is likely to miss its target of cutting the fiscal deficit to 4 per cent of gross domestic product (GDP) in 1999/2000 (April-March) from 4.5 per cent the previous year, securities firm PNB Gilts said.
"If the data for the current five months is any indication, the prospects of bringing down the fiscal deficit to 4 per cent of GDP from 4.5 per cent in 1998/99 appears difficult," it said in a market commentary made available to Reuters on Monday.
PNB Gilts, a wholly owned subsidiary of state-owned Punjab National Bank, said an increase in the fiscal deficit in the first four months of this fiscal year was mainly due to increased expenditure due to a 10-week border conflict with Pakistan.
India and Pakistan stood on the brink of their fourth war when Indian forces fought armed intruders on its side of the military control line in Kashmir earlier this year.
The gross fiscal deficit of the federal government during April-July was about Rs 460 billion ($10.56 billion)compared to Rs 423 billion during the same period last year, PNB Gilts said.
"At this level, it constitutes 57.4 per cent of the budgeted fiscal deficit target of Rs 799.55 billion for the full financial year. The corresponding figure for last year was 46.5 per cent," it said.
The commentary said the drop in cumulative export growth to 4 per cent during April-July 1999 from 6.5 per cent in the first quarter of 1999 would make it difficult for the government to achieve its target of 11 per cent export growth for 1999/2000.
"The sharp drop in exports growth to 2.1 per cent in July1999 after registering double digits in the last (previous) two months raises some doubts about the sustainability of exports growth," PNB Gilts said.
Exports during April-July 1999 were $11.04 billion, 4.04 per cent higher than $10.61 billion in the same period last year while imports at $14.07 billion were 1.01 per cent higher than the year-ago period, it said.
"There is a need to lay greater stress on exportcompetitiveness and diversification of the export basket to cater to the changing tastes and preferences of the international economy," the report added.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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