Economy Updates - Fiscal deficit at 7.8 pc of GDP

Indian Economy Updates - Including bonds issued to oil and fertiliser companies, the government's fiscal deficit for the year to March is estimated at 4.22 trillion rupees ($84 billion), the minister of state for finance said on Thursday. That equates to a total federal fiscal gap of 7.8 percent of gross domestic product.

Last week, the finance minister said in the budget speech the federal fiscal deficit would rise to 3.27 trillion rupees, or 6 percent of GDP, this financial year, but that did not include the off-balance sheet oil and fertiliser bonds.

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In a written reply to parliament, Pawan Kumar Bansal said a rise in global oil and food prices had lifted the government's subsidy bill, while stimulus packages to shield the economy from the global slump had raised expenditure.

"The fiscal deficit including the liability on account of securities issued during the year to oil marketing companies and fertiliser companies is (4.22 trillion) rupees," he said.

On Tuesday, Standard & Poor's cut its outlook on the country's long-term sovereign credit rating to negative from stable projecting the country's deficit, including off-budget items such as oil and fertiliser bonds, to increase to 11.4 percent in 2008/09, up from 5.7 percent in the previous year.

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