Monday, February 01, 2016
Rating agency Standard & Poor's has said that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed. Commenting on the issue, a S&P Official told the media,” Although we expect the administration to pursue its stated fiscal consolidation programme, we foresee that planned revenues may not fully materialise and subsidy cuts may be delayed." "India's fiscal challenges reflect both revenue under performance and constraints on expenditure (mainly related to subsidies for food, energy, and fertilisers)," he added. The Official further added that in the medium term, S&P expected improved fiscal performance primarily from revenue-side improvements, brought about by the planned introduction of the Goods and Services Tax (GST) and administrative efforts to expand the tax base. As per reports, in the Budget 2015-16 Government deviated from the fiscal consolidation path, postponing fiscal deficit targets by a year. The original target was to bring it down to 3.6 per cent of the GDP in 2015-16 but it had been postponed by a year. Now, Government is targeting 3.9 per cent in the current fiscal and 3.5 per cent by next year.