“We are expecting a consolidated fiscal deficit of the Centre and the states to touch 13 per cent of GDP going by the current trends,” the report said.
According to the data released by the Controller General of Accounts (CGA), fiscal deficit, the gap between expenditure and revenue, during April-August was at 109.3 per cent of the annual target estimated in the Budget. In absolute terms, the fiscal deficit was at Rs 8,70,347 crore.
“Given these numbers (fiscal deficit had touched 109.3 per cent by August already at Rs 8.7 lakh crore), sticking to the budgeted borrowing numbers of (Rs 12 lakh crore) indicates large expenditure cuts that will be clearly inimical to growth,” the report noted.
The report did not offer separate numbers for the Centre and the states.
SBI Research had earlier projected a more than doubling of the Centre’s fiscal deficit at 7.9 per cent from the government’s revised estimate of 3.8 per cent.
The government sticking to the borrowing programme though will please the debt market, looks challenging given the current exceptionally weak government finances, the report added.
“Net revenue slippage of the Centre, after taking into account increase in excise duty, that grew at over 32 per cent till August, gains along with the shortfall in tax and non-tax revenue and disinvestment receipts, is likely to come around Rs 7 lakh crore in current fiscal,” it said.
In more worrying signs, the report noted massive fall in incremental bank credit growth in August by a whopping Rs 36,000 crore, against an incremental increase in June and July by Rs 39,200 crore, mainly due to decline in credit to personal loans and infrastructure segments.
Credit to NBFCs, however, jumped in August after three successive months of decline.
The report further noted that the deposits (savings, current and term) which increased to Rs 1.21 lakh crore in unlock 2 has declined significantly during unlock 4. The same story follows in the case of advances.
According to report, the short-term consumer leverage (credit cards, personal loans, advances against FD, shares, bonds outstanding etc) which had reached a peak in FY18 at Rs 1.56 lakh crore, declined to Rs 1.29 lakh crore in FY19 but increased marginally to Rs 1.35 lakh crore in FY20.