India budget gap breaches estimate on ‘tax collection’

Bloomberg

India’s budget gap for the year ended on March 31 has touched 4.4% of gross domestic product — a six-year peak — breaching the target set in February as an economic slowdown reduced tax collections, people with knowledge of the matter said.
A revenue shortfall of 1.7 trillion rupees ($22 billion) led to the higher deficit number, the people said, asking not to be identified as the figures are not public. Finance minister Nirmala Sitharaman had targeted a 3.8% gap. A finance ministry spokesman declined to comment.
The budget gap at 4.4% means the federal government might have to suspend a law meant to cap its fiscal deficit, according to Anubhuti Sahay, head of South Asia research at Standard Chartered Bank Plc. That may put the credit rating outlook for India at risk.
The government had suspended it during the global financial crisis, Mumbai-based Sahay said.
Fitch Ratings and Standard & Poor’s may change their outlook to negative, she said. The slippage adds to the challenges faced by Prime Minister Narendra Modi, who is trying to salvage growth that has ground to a halt due to a nationwide lockdown to check the spread of Covid-19.
Tax collections are likely to remain under pressure as the shutdown decimated consumption. A survey by the Confederation of Indian Industry showed most chief
executive officers don’t expect demand to revive until
September.