Skip to content
Research Capview Starry Night – Nov 2022

Starry Night – Nov 2022

Written by - Fisdom Research

November 15, 2022 3 minutes

Challenging fiscal performance

Central Government had a tough fiscal performance in H1FY23

Table: Fisdom Research • Source: CMIE • Created with Datawrapper

  • Central Government had a rugged fiscal performance in H1FY23. It used only 37.3 percent of the gross fiscal deficit budgeted for the entire year. Typically, the government does 65 percent of the annual budgeted budgetary deficit in the year’s first half. It was mainly because of the shortfall in revenue collections in the year’s initial months. The capital expenditure kept pace in the first half of FY23. The government disbursed 45.7 per cent of its annual budgeted capital expenditure in the first half of the year, which is higher than the average of 42.9 percent in the last two-and-a-half decades.
  • Troubles regarding deficit levels emerged as the government announced the extension of the PM-GKAY scheme till Dec’22 at the cost of Rs.448 billion, a 4 percent increase in central government employees’ DA allowance, which would cost about Rs.86 billion and a one-time grant of Rs.220 billion for oil marketing companies (OMCs) to compensate for the losses incurred on the subsidised sale of LPG.
  • We expect the fiscal situation to be demanding unless the geo-political situation improves drastically.

The controlled external debt situation

India placed relatively in a much better position compared to other countries

Table: Fisdom Research • Source: CMIE • Created with Datawrapper

  • Drawing upon insights from RBI’s report covering India’s external debt situation, the Indian economy’s sustainability basis debt fared better than the LMIC (Low and Middle Income Countries) group while also outranking most on a variety of vulnerability indicators.
  • Basis external debt, India ranks at a modest 23, globally. However, U.S’ state of ballooning external debt in a highly globalized trade economy is a looming risk to the world economy even as it flags the possibility of a dreadful contagion.

Comfortable external debt

India’s external debt situation appears comfortable and diversified across multiple currencies

Outstanding External Debt

Table: Fisdom Research • Source: CMIE • Created with Datawrapper

Currency Composition of Outstanding External Debt

Table: Fisdom Research • Source: CMIE • Created with Datawrapper

  • Though India’s external debt is rising, it continues to be tolerable and prudently managed. Unlike other countries, India’s external debt is well diversified across multiple currencies and hence relatively insulated from the uptick in the dollar index.
  • Even as highlighted earlier, India’s external debt is modest compared to other countries, occupying the 23rd  position globally. Even the forex reserves to external debt ratio stood at 86 percent compared to 97 percent in Mar’22. The drop in percentage is attributable to the RBI’s active intervention in the currency market to limit the rupee depreciation. It is not quite related to the sudden spike in external debt.
  • There are short-term debts(43 percent of total external debt) up for maturity in FY23. Still, if we compare the ratio of short-term external debt (residual maturity) to reserves, the same was significantly lower at 44.1 as of Mar’22 vs 59 per cent as of Mar’13, reflecting an extended reserves buffer.

Download the full report to get the complete coverage

Download Full Report

Share the article

Get exclusive content and expert advice

Subscribe to fisdom to get regular updates in the finance world delivered to your inbox each month

Other Post

Periodic Report

Zomato Gains on Acquisition News, Indus Towers Stake Sale Impacts, Sona BLW Certification Boosts, Defense Stocks Face Profit-Taking and more.

Periodic Report

Indus Towers Stake Sale, HUDCO’s Syndicated Loan, Vodafone Idea’s Equity Conversion, and Kotak Mahindra Bank’s Stake Adjustment

Periodic Report

Paras Defence’s Major Deals, BLS E-Services’ Acquisition, and HFCL’s Exemption Drive Significant Gains and more.

Periodic Report

Legal Setback for TCS, Stake Increases for Adani, Strategic Moves by Paytm, and Vodafone’s Indus Tower Sale

The Signal

Turning Point for India’s Chemical Sector

Periodic Report

EIH Associated Hotels Gains Ahead of Bonus Share Decision, Mahindra & Mahindra’s Rise , Adani Ports’ Target Price Upgrade and more.

Periodic Report

Ambuja Cements’ Major Acquisition, Vodafone Idea’s Fundraising, Tata Consumer Products’ Expansion, and LIC’s Growth Plans

Periodic Report

Paytm Surges on Samsung Partnership, Whirlpool Hits 52-Week High, Sobha Gains on Rights Issue Approval and more.

Periodic Report

Dr. Reddy’s Licenses Cancer Drug, Glenmark Gains FDA Approval, Tata Motors Expands Market Strategy, and Federal Bank Seeks New CEO

Periodic Report

Shipping Corporation Gains on Divestment Progress; HCL Tech Rises with $278M Deal Renewal; Rites Surges on New Railway Agreement and more.

Periodic Report

HCL’s Collaboration, SBI’s Debt Plan, Union Bank’s Fundraising, and Wipro’s AI Launch

Periodic Report

InterGlobe Aviation shares decline after block deal; RVNL surges on railway project win as IRB Infrastructure drops on stake offload news and more.

Related Articles

Download one of India's best wealth management apps

Join more than one million investors and take control of your wealth

Download app