Mumbai, Jan 4 (PTI) A fiscal slippage in FY18 willlikely result in the government opting to go for a wider gapfor 2018-19 in the upcoming budget, foreign lender DBS saidtoday.The fiscal deficit number for 2017-18 will come at 3.5per cent as against the targeted 3.2 per cent of the GDP andit will result in the government opting to settle for a targetof 3.2-3.3 per cent rather than the 3 per cent under thefiscal consolidation roadmap."The FY18 deficit might be pegged at 3.5 per cent ofGDP (similar to FY17), which opens room for the FY19 target tobe set at 3.2-3.3 per cent compared to the roadmap’s 3 percent," Singaporean lender DBS said in a note.It can be noted that the government has alreadyexhausted 112 per cent of the 2017-18 target by November 2017,with four months to go. It also announced an additionalborrowing of Rs 50,000 crore for FY18.DBS attributed the difficulties on the fiscal math tothe shortfall in receipts and added that the expenditure hasstayed on the planned course.It said the expenditure compression in the remainderof the fiscal will have to be aggressive if the 3.2 per centtarget has to be met.A higher fiscal deficit target for the next fiscalwill result in a higher borrowing by the government, it said."Expectations are building for a populist budget,targeted at rural/ agricultural development, job creation, andeffective implementation of social sector schemes," it said.Opting for a fiscal deficit target of 3.2-3.4 per centwill lead to a surge in Government borrowings to Rs 4.8-5.2lakh crore, it said.A wider deficit, which is generally seen as beinginflationary in nature, will lead the Reserve Bank to settlefor a long pause in its rates stance, it said, adding thatfactors like inflation "warrant attention".The headline inflation may go up to 5.2-5.4 per centrange in December, it said, adding that the price risesituation will not abate to the 4 per cent target set for RBIfor the next six months.The bond yields, which are rising lately, will move further and the benchmark will be trading at 7.5-8 per cent in the coming quarters, it said.

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