Budget 2019: India lets fiscal deficit targets slip this financial year and next

India's interim Finance Minister Piyush Goyal holds his briefcase as he arrives at the parliament to present 2019-20 budget in New Delhi, India, February 1, 2019. REUTERS/Adnan Abidi

NEW DELHI (Reuters) - India set a fiscal deficit target of 3.4 percent of gross domestic product (GDP) for 2019/20, higher than a previous estimate, and also said it would breach this year’s target, as an interim budget presented on Friday boosted spending for the rural sector.

The deficit for the year ending on March 31 was expected to come in at 3.4 percent of gross domestic product (GDP), slightly higher than the targeted 3.3 percent, the country’s acting finance minister Piyush Goyal told the Lok Sabha.

The new targets the government had slipped from its earlier commitment to bring down the fiscal deficit to 3.1 percent of GDP by the end of March 2020, and to 3 percent by March 2021.

The higher 2019/20 fiscal deficit target is due to “need for income support for farmers”, Goyal said, delivering the Hindu nationalist-led government’s last budget before an election that must be held by May.

The deficits were widely expected to be higher than targeted due to a combination of revenue shortfalls and increased spending ahead of the election.

Reporting by Aftab Ahmed, Manoj Kumar and Mayank Bhardwa; Writing by Krishna N. Das; Editing by Simon Cameron-Moore