Terming government's fiscal situation as "gloomy", rating agency Icra today said some restriction on productive expenditure will be necessary for sticking to the fiscal deficit target of 4.8 per cent.
"Government's fiscal situation remains gloomy, with high deficits in the eight months ending November and a challenging revenue outlook for the rest of the fiscal. Some restriction of productive expenditure seems necessary to restrict fiscal deficit to the targeted level," Icra said in a release after the government said it had used up 94 per cent of the market borrowing legroom by November.
It also said that reduction in productive expenditure would suggest a sub-par quality of fiscal adjustment and weakening growth impulses.
Fiscal deficit touched Rs 5,09,557 crore during the April-November period which is 93.9 per cent of the annual target, the Controller General of Accounts (CGA) said today.
The government had fixed the target for the fiscal deficit -- the gap between expenditure and revenue -- at Rs 5,42,499 crore for this financial year or 4.8 percent of GDP.
The government has repeatedly asserted that the fiscal deficit would be restricted to 4.8 per cent of GDP, down from 4.9 per cent in 2012-13. Finance Minister P Chidambaram had on several occasions said the fiscal deficit target is a red line that would not be breached.
Its optimism is based on expectation that tax mop up will grow at 19.1 per cent and divestment will fetch Rs 55,000 crore and spectrum auction Rs 40,000 crore.
However, the latest tax numbers show the collection grew only about 13 per cent while divestment could fetch only Rs 1,300 crore so far.
Spectrum sale will begin now in February.