Indian government spending this financial year could be below budget for the first time in three years, two sources with direct knowledge of the matter told Reuters, as part of an effort to hit a deficit target. budget of 6.4% of gross domestic product.

Total expenditure for the FY23 financial year which started on April 1 could be between ₹700-800 billion ($8.59 billion-$9.82 billion) below the budgeted ₹39.45 trillion, the sources said, on condition of anonymity.

The government is keen to get the budget deficit under control as it is well above historic levels of between 4% and 5%, after hitting a record high of 9.3% in the first year of the COVID-19 pandemic in 2020- 21.

Although fuel tax cuts, aimed at reducing the impact of soaring global energy prices, could cut revenue by more than ₹1 trillion, one of the sources said revenue totals are expected to rise further by more than ₹1.5 trillion to ₹2 trillion this year.

The increase in revenue would still not be enough to cover the additional planned expenditure, for example, the government potentially having to provide additional food and fertilizer subsidies of ₹1.5-1.8 trillion, the sources say.

Despite these pressures, the government remains committed to meeting its deficit target, according to one of the sources.

“The government will not budge from the budget deficit target,” the source said, noting that “spending rationalization” would be needed.

The sources did not specify which sectors would be likely to be affected by the spending cuts, as discussions on revised budget estimates were ongoing and a final call would be made by the end of December.

The finance ministry declined to comment.

Economists at brokerages such as Citi, Kotak and ICRA see a risk to the 6.4% deficit target.

Without any spending cuts, Kotak expects a budget deficit of 6.6%, while ICRA expects the government to exceed the deficit target of ₹16.61 trillion by ₹1 trillion. ₹.