Expectations of fiscal deficit for 1999-2000 were around Rs 1,10,000 crore, whereas the target is significantly lower at Rs 79,955 crore. ICICI Securities, in its comments on the Union budget, said small savings collections passed on to the states have been excluded from both the borrowings and the expenditure side. If this amount is added back in line with the accounting policy used previously, the fiscal deficit would be Rs 1,04,955 crore.

The shortfall in indirect taxes and the current pace of the disinvestment process will lead to a slip in fiscal deficit to 6.5 per cent of the gross domestic product (GDP) for the current financial year. While this is lower than the 7 % fiscal deficit projected by Claude Smajda, chief of the World Economic Forum, I-Sec is far less optimistic about meeting thetargeted deficit of 5.6 per cent of GDP set by finance minister Yashwant Sinha.

``Fiscal deficit appears set to overshoot the targeted Rs 91,025 crore (5.6 per cent) by at least Rs 15,000 crore. This is a result of the shortfall in indirect tax collection as well as a likely shortfall in the disinvestment target,'' I-Sec said in its report. The ICICI subsidiary has said that the shortfall in customs is expected to Rs 6,648 crore and excise at Rs 6,690 crore while income tax collection might exceed the target by Rs 70 crore and corporation tax by Rs 1450 crore.

``With equity markets continuing to be sluggish the disinvestment target could also be affected. Against the budgeted Rs 5,000 crore for the fiscal, Rs 225 crore has been raised,'' it said. Last year the fiscal deficit exceeded the target by Rs 20,891 crore. This was mainly through excess small savings collections and additional market borrowings. The higher budget for small savings, etc. this year provides little leeway and most of the fiscalslippage would need to be funded from additional market borrowings, report said.

The net borrowing programme has been budgeted at Rs 57,462 crore which implies gross borrowing programme of about Rs 84,000 crore. During fiscal 1998-99, the borrowing programme was supported by Resurgent India Bond (RIB) inflows as well as Reserve Bank of India (RBI) support to the tune of Rs 20,000 crore.

Given the fact that the budgeted numbers are similar to those in 1998-99, the absence of RIB-like flows would result in tightness in bond markets during the course of the year, I-Sec said, adding fiscal slippage or improved credit offtake would exacerbate the situation. The study said the finance minister presented the budget this year under fairly difficult circumstances. The economy has been on a path of slow growth for the last three years, with some critical sectors witnessing recessionary conditions. Government finances are in none too healthy a state with debt servicing exceeding non-debt receipts, technically aninternal debt trap, I-Sec observed.

Overall, the direction of the budget is positive with emphasis on reducing government deficit and continuing economic reforms, it stated. For the fixed income markets, the lower than expected borrowing programme is positive, but the projections appear optimistic, I-Sec said.

The budget has focussed on some long term structural changes and tried to usher in a smaller government.