new delhimumbai the government will not be able to cut its budget deficit this fiscal year as previously projected officials said but will seek to cap the shortfall at last years level to prevent a major deterioration in public financesefforts to maintain some fiscal discipline reflect new delhis concern around risks to its sovereign credit rating but will likely limit the governments firepower to contain inflation and provide relief to households and businessesin february prime minister narendra modis government set a fiscal deficit target of 64 of gross domestic output gdp for the year that started on april 1 compared with a deficit of 67 last yearthe sources said that while increased spending to provide relief from inflation meant the government would miss this years target policymakers would seek to limit the deviation to 30 basis pointswe will try to contain the slippage to last years levels one of the officials who declined to be identified told reuterssurging costs forced india in may to cut fuel taxes and change duty structures hitting revenues by about 1916 billion while additional fertiliser subsidies lifted expenditurethe government and central bank have scrambled to contain prices through fiscal measures and monetary tightening after inflation jumped to multiyear highsretail inflation has held above the reserve bank of indias 6 mandated ceiling for five straight months while wholesale price inflation has risen to 30year highsthe government is wary of the risks fiscal slippage poses to its sovereign credit ratings its debt to gdp ratio which stands at around 95 is significantly higher than the 6070 levels for other similarly rated economiesthat leaves the government with little room to provide additional relief as the may measures are already expected to drive up the deficit by more than 30 basis points if revenue collection does not exceed the budget targetthe government can definitely do more but at what cost if more steps are taken it will require additional market borrowing and that will drive up yields and eventually cause higher inflation said a second source who is aware of the discussionsthe government is reluctant to expand its record market programme of rs 1431 lakh crore this fiscal year both officials said adding that a decision on an additional borrowing requirement would only be taken in novemberthe benchmark 10year bond yield rose 1 basis point to touch the days high of 744 following the report extending its gain to 4 bps on the daythe finance ministry did not immediately respond to requests for commentfrom here on monetary policy will bear the larger burden of initiating inflationgrowth corrective balance the first quarter has been good in terms of tax collection but alongside the excise cut could neutralise it said shubhada rao senior economist and founder of quanteco researchearly days yet to quantify the extent of slippage if any the net borrowing is already large it would be absolutely the last resort to go for additional market borrowing she addedthe first official said fertiliser subsidy bills could rise by rs 50000