Govt likely to miss revenue growth target of 23.4%: Crisil
Mumbai: Ratings agency Crisil has said the government is not likely to meet the revenue growth target for next fiscal as its estimates from spectrum and divestment sale inflows are too ambitious.
"We believe the government is likely to miss the revenue growth target of 23.4 percent in 2013-14 as investment and spectrum sale targets are too ambitious," it said in a report on Friday.
It said the Rs 58,000 crore expected from disinvestment and Rs 40,000 crore from spectrum are difficult to achieve.
The report mentioned that achieving a budgeted revenue and expenditure target will be an ardous task given the weak GDP figures, along with the fact that it is an election year.
Crisil, however, noted that while the fiscal consolidation could hurt growth in the short-run, it would create an environment in which the Reserve Bank can cut interest rates and provide support to growth.
Referring to GDP figures in the next financial year, the report said it retains its earlier forecast of 6.4 percent.
"As budgetary proposals are broadly in line with our expectations, we retain our pre-budget forecast of 6.4 percent GDP for 2013-14, which is the midpoint of the GDP growth range (6.1 to 6.7 percent) that the budget has assumed," the rating agency said.
On inflation, the rating agency said it would decline during the next financial year with WPI inflation averaging around 6.5 percent due to low crude oil price, strengthening of rupee and lower core inflation.
It also said market borrowing of Rs 4.84 trillion next fiscal against Rs 4.67 trillion this fiscal would create an upside pressure on 10-year G-Sec yields.
"However, we expect a lowering of the repo rate by 50-75 bps during the rest of 2013-14, due to lower inflation. This will lower the floor for the G-Sec rate and soften yields to around 7.7-7.8 percent by March-end 2014," it said.
The report also said rupee is likely to settle around 51-52 per dollar by the end of March 2014.