More cuts needed to meet fiscal deficit target, says Fitch

Fiscal deficit has already reached 94% of its stated target in first eight months

Rating agency Fitch on Friday said the government would have to go for a further cut in expenditure to meet its fiscal deficit target of 4.9 per cent of the gross domestic product for the current financial year.

The fiscal deficit has already crossed 94 per cent of its stated annual target in the first eight months of the financial year. For the same period last financial year, it stood at 80 per cent. Unless revenues surprise on the upside in the remaining months of the year, a greater expenditure cut is needed to meet the target, the agency added.     

There were, however,  signs of improvement in the current account deficit, the rating agency said.     

CAD for the quarter ended September 2013 declined sharply to 1.2 per cent of GDP. CAD stood at 4.9 per cent for the first quarter ended June 2013.

The RBI has said that CAD for FY14 is expected to be about $ 56 billion, less than three per cent of GDP. Meanwhile, India Ratings & Research, Indian arm of Fitch Ratings, said it expects the current account deficit (CAD) to decline to 1.1% of GDP in third quarter of FY14 based on the trade deficit of $ 10.1 billion in December 2013.