Fiscal position to worsen ahead of polls: Report

Calling for a tight monetary and fiscal policy amidst global uncertainties and upcoming general elections, a foreign brokerage today warned of worsening fiscal position due to poll-related spending spree before next May when the new Parliament has to be instituted.

It has projected the consolidated fiscal deficit for FY19 at 6.5 per cent of GDP against a budgeted 5.9 per cent, which is only 10 bps lower than FY18.

"Specifically, there is a risk of the centre breaching its fiscal deficit target of 3.3 per cent of GDP by at least 20 bps in FY19 unless it adjusts expenditure or non-GST revenue collection is higher than budgeted," Swiss brokerage UBS said in a note.

Noting that consolidated fiscal deficit was already stretched at 6.6 per cent of GDP in FY18, it said, "we see a risk that the combined fiscal deficit will remain elevated at 6.5 per cent of GDP in FY19 against a budgeted 5.9 per cent."