India May Unveil Biggest Budget Deficit Since 1991 Amid Slump
India may unveil its biggest budget deficit in 18 years as the government increases spending to protect the economy from the global recession ahead of elections in two months.
The shortfall may widen to 6.5 percent of gross domestic product in the year ending March 31, almost three times the government’s target of 2.5 percent, according to Macquarie Capital Securities. Citigroup Inc. estimates a 6.3 percent gap. The budget will be presented today in parliament in New Delhi.
Prime Minister Manmohan Singh’s government says spending to revive the economy is more important now than worrying about the deficit. The largest budget shortfall since 1991 may prompt rating companies to lower their assessments of India’s credit worthiness, spooking foreign investors who are already retreating from emerging markets.