India Budget - Navigating Troubled Waters : ICICI Bank Treasury Research Group report
Kolkata, July 4 (IBNS): Fiscal deficit target of 3.4 per cent, could be difficult to achieve, in light of revenue constraints, expenditure priorities in the face of slowing growth and promised economic and welfare schemes to the electorate, according to a pre-Budget report published by ICICI Bank's Treasury Research Group.
India's first full-time woman finance minister, Nirmala Sitharaman, will present her first budget on Friday.
The report titled 'India Budget: Navigating troubled waters' said it expects a slippage on the fiscal deficit interim target by 20 bps to 3.6 per cent of the GDP.
According to the report, dated issuances will remain unchanged.
The Union government is likely to fund the increased deficit through increased reliance on NSSF funds, T-Bills and drawdown on cash balances, it said.
The report also said that once Budget is out of the way, environment is likely to be bond supportive on expectations of more rate cuts, adequate liquidity provision, benign oil prices and supportive global monetary policy environment amid global growth concerns
"We feel from a philosophical standpoint this Government continues to believe strongly in the need to adhere to a credible fiscal consolidation path," said the Bank's Treasury Research Group.
The Research Group expects net tax collections in FY 2020 to witness another slip of approximately Rs 600 billion from the FY 2020 interim budget estimate and is likely to weigh on the fiscal deficit of the government.
The report has assumed that the the Union Government’s revenue expenditure will be budgeted 22 per cent above the actual Rs 20.1 trillion spending seen in FY2019, and slightly exceed the Interim Budget figure
The research report said that it assumes the Union Government to budget a mildly lower capex of Rs 3.2 trillion as compared to the target set in the Interim Budget (Rs 3.4 trillion).
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