Even as finance minister Nirmala Sitharaman says that India would continue to stick to the fiscal glide path, Morgan Stanley sees the government slipping on the FY20 deficit target. The fiscal deficit in the ongoing fiscal may slide to 3.6 per cent, global brokerage Morgan Stanley said. On Monday, Nirmala Sitharaman said that the performance of the government on the fiscal front has been credible, with a deficit below 4 per cent of GDP since FY16. On concerns over the government overshooting the 3.3 per cent target for FY20 owing to the corporate tax cut and the lower-than-expected tax buoyancy, Nirmala Sitharaman said: "Let the RE (revised estimate) stage come and we shall take a call on the fiscal deficit." The government has so far been maintaining that the deficit target will be adhered to, Nirmala Sitharaman added.
The fiscal deficit has hit 102 per cent of the budget estimate till October, surpassing the full-year target. The deficit touched 102.4 per cent of the FY20 budget estimate at Rs 7.2 lakh crore in the first ten months so far, the government data showed.
Even as the economy sees a slowdown, Morgan Stanley remains overweight on India. The global brokerage sees the GDP growing at 5.3 per cent in FY20. In FY21, the GDP may grow at 6.6 per cent, it added. In Q2FY20, the GDP grew at a dismal rate of 4.5 per cent as against 5 per cent in the first quarter of the fiscal. The economy is seeing a slowdown on account of both domestic and global concerns. The government has announced a slew of measures in the last few months to revive the economy ranging from a cut in the corporate tax rate to recapitalisation of public sector banks.