RTTNews - India's fiscal deficit for the current financial year has shot up 16.3% of the estimated deficit of the year to Rs.54,100 crore, due to rise in public spending and a sharp drop in revenue collection, reported the Economic Times citing data released by the Controller-General of Accounts on Tuesday. Government-spending in April almost doubled from the corresponding period last year even as net tax receipts fell by 32% on a year-on-year basis.

Fiscal deficit is a measure of the amount the government needs to borrow to meet its expenditure. Large government borrowings can cause interest rates to go up sharply.

IndusInd Bank head Moses Harding said that the market had already factored in an upward revision of borrowing targets and was waiting to assess its quantum. He said that the upwardly revised fiscal deficit would lead to a greater spike.

However, primary dealers of the bond market say that the fiscal gap may narrow in the coming months with increase in tax collection because of revival in the economy and the government managing to raise money through disinvestment and the auction of spectrum for 3G services.

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