MUMBAI - India's fiscal deficit for 2008-09, will rise to 6.5 percent of GDP, above an earlier estimate of 5.5 percent and higher than the central bank's projection of 5.9 percent, Macquarie Research said on Tuesday.
* Including off-budget oil and fertilizer bonds, the deficit may rise to 8.1 percent of the GDP, due to salary increases to federal workers, a farm loan waiver and a rural employment guarantee scheme, Macquarie said.
* Even though the sizable spending will be useful in cushioning the economic slowdown, at such levels of fiscal deficit, credit rating agencies may downgrade the country's ratings, Rajeev Malik, economist at the firm wrote in a note.
* At the full federal budget for the 2009/10 year, expected by mid-year, the deficit excluding off-budget allocations may remain largely unchanged at 6.5 percent of the GDP, Macquarie said.
* Macquarie also sees the yield on 10-year benchmark bond to decline by 50-75 basis points from current levels.
Tue Feb 3, 2009 1:49pm IST
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