Union budget should aim to boost growth and achieve fiscal consolidation: BoB economic research

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KOLKATA: Ahead of upcoming national elections, the Union’s budget for FY 2022-23 will aim to boost growth, achieve fiscal consolidation and boost consumption, Bank of Baroda (BoB) says in its latest economic research report.
He also said there could be changes in tax breaks, while production-linked incentive (PLI) schemes could get a higher allocation to boost investment demand.
To avoid volatility in the bond market, gross borrowing is likely to be kept within the range of Rs 12-13 lakh crore, despite higher repayment obligations. Thus, the estimated budget deficit is expected to be between 6% and 6.25% in the 2022-23 financial year, according to the report.
In line with a 13% increase in nominal gross domestic product, the Center’s net income is expected to increase by 12.2% and expenses by 4.5% in the next fiscal year, he said.
Assuming that a large part of the current fiscal year’s divestment target will be met, the expected divestment proceeds in the next fiscal year will be around Rs 75,000 crore, according to the report.
According to her, the budget deficit will be financed by market borrowing in the next fiscal year.
The report also mentions that the ratio of gross tax revenue to GDP is expected to remain broadly unchanged.
Higher nominal GDP will imply that gross income will rise from Rs 26.5 lakh crore in the next financial year to Rs 22.2 lakh crore under current budget estimates.
The upcoming budget could focus on raising the standard deduction limit for the salaried class by Rs 50,000. Overall, there could be a balance between consumption-centric and investment-centric policies, adds The report.
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