The tax revenues for year till October 2009 have declined by 8% yoy to Rs2.1tn. With 32% yoy growth in expenditure, the fiscal deficit has almost doubled to Rs2.5tn.
Despite a growth of 6.5% in the IIP, the indirect taxes have failed to pick up and declined by 22% YTD. We believe that the government will fall short by ~Rs150bbn on the indirect taxes revenues front. We believe that while a part of the same may be funded with divestments, one can definitely expect a gradual withdrawal of the stimulus package last year in Q4FY10.
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