After opening the day on a negative note, Indian share markets have continued the downtrend and are currently trading in the red. All sectoral indices are trading in the red, with stocks in the consumer durables sector and stocks in the realty sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 780 points (down 2.4%) and the NSE Nifty is trading down 265 points (down 2.5%). Meanwhile, the BSE Mid Cap index is trading down by 2.3%, while the BSE Small Cap index is trading down by 2.9%. The rupee is trading at 64.11 to the US$.

In news about the economy. Global banking and investment firm, Goldman Sachs in a report said that budgeted fiscal deficit is in line with expectations but there are some risks of slippage in financial year 2018-19, unless economic activities formalize at a rapid pace.

According to the global financial services major, while the budgeted deficit is in line with expectations, the revenue targets are on the optimistic side, particularly on recently- introduced GST tax revenue growth.

The government outlined a fiscal deficit target of 3.3 per cent of GDP in 2018-19 as against a revised estimate of 3.5 per cent in 2017-18, indicating some fiscal consolidation.

Note that the government missed its fiscal deficit target for FY18 by 30 basis points. Against a target of 3.2%, the government managed to keep fiscal deficit at 3.5% in FY18. It has also outlined the projected fiscal deficit target of 3.3% in FY19 in its budget.

Steady Decline in Fiscal Deficit Over the Years

Maintaining this deficit target in FY19 won’t be easy.

In the past, the government has relied on reducing expenditure to keep the fiscal deficit in check.

For the next year, the government is banking on earning much more than it has in the past. It expects a major portion of the revenue to be collected through GST tax collections. Also, the recent rise in crude oil prices has cast a doubt over how much the government will be to curb its spending. It also needs to revive the economy from the shock of Notebandi.