The core sector growth for December 2019 improved and grew by 1.3 per cent as against the 0.6 per cent contraction seen a month ago. However, it was lower than 2.1 per cent growth witnessed in December 2018.
During the first nine months of the fiscal year 2019-20, the fiscal deficit of the central government has surpassed its budgeted estimate. During April-December 2020, the actual fiscal deficit was at 132.4 per cent of the budget target. The fiscal deficit during this period was Rs 9.4 lakh crore, higher than higher than the budgeted Rs 7.04 lakh crore for FY20. Lower tax collections and lower disinvestment proceeds coupled with significant growth seen in both revenue and capital expenditure has led to higher fiscal deficit.
We are expecting around 0.5 per cent slippage in the fiscal deficit, which is expected to move to 3.8 per cent of GDP for FY20.
Core Sector update -December 2019
The core sector growth for December 2019 improved and grew by 1.3 per cent as against the 0.6 per cent contraction seen a month ago. However, it was lower than 2.1 per cent growth witnessed in December 2018. The growth has been aided by improvement in the production in 3 industries namely refinery products, coal and fertilizers. In terms of cumulative growth in the eight core industries during April-December 2019, the growth was 0.2 per cent compared with the 4.8 per cent growth registered during April-December 2018.
CARE Ratings- view
Based on the core sector growth, IIP is expected to grow by 2 per cent for December 2019 which would also be aided by the base effect. We are expecting IIP to grow by 4 per cent for FY20.
COURTESY: CARE RATINGS- Fiscal and Core Sector Update
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