The global credit rating agency, Crisil in its latest report has said that the fiscal deficit target of 3 per cent for 2017-18 will be hard to hold as the debt dynamics of the country show stickiness. Further the agency stated that to help economy, there is a need to move to a range which will provide some flexibility to the government.
It stated that to maintain fiscal prudence for the next two to three years, government needs to come up with substantial steps to push up the revenues. Though, it said that the borrowing target is not expected to be very large and in line with the fiscal deficit target, adding that they are not significant or at the level that would spook the stock market and reverse the gains.
Further, agency noted that in FY17, spectrum or excise duty on oil that has led to revenue windfall are all temporary measures and may reverse in the coming fiscal. It added that the income Declaration Scheme (IDS) scheme too may not provide much support and can't continue forever.
On the current scenario, the rating agency has said that country has not been able to bring down the debt-GDP ratio which is quite high and it makes matters complicated and the government should focus on execution capacity so that the budget does not lie unused. It said that the GDP estimate is around 6.9 per cent for 2016-17.