India likely to achieve fiscal deficit target despite high expenses: IMF

"The central government is likely to meet its 5.9% deficit target for FY23-24," Krishna Srinivasan, IMF's director for the Asia and Pacific department, was quoted as saying by Reuters.

Prime Minister Narendra Modi's party, gearing up for elections in crucial states this year and national polls in 2024, is under pressure to generate employment opportunities and support farmers. This may result in higher-than-planned expenditure for the year.

Earlier this month, India raised the cooking gas subsidy for low-income households to 300 rupees per cylinder, up from the 200 rupees announced in August.

This could supplement the 3.74 trillion rupees allocated for subsidies on food, fertilizers, and fuel in the current fiscal year. Given the approaching elections, more such measures are anticipated.

"There's some pressure on expenditure with higher than budgeted expenditure expense some areas – subsidies, higher MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) expenses. At this stage, we see room in the budget to absorb these unexpected increases," Srinivasan said.

Earlier in October, the IMF revised its growth projection for Asia's third-largest economy upward to 6.3% from 6.1%, citing unexpectedly robust levels of consumption.