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Budget 2024 to focus on fiscal consolidation, capital expenditure: Barclays
The Budget 2024 is expected to prioritize capital expenditure and fiscal consolidation, aiming to reduce public debt and create more fiscal space, according to Barclays.
The Budget 2024 will most likely focus on fiscal consolidation while also prioritising capital expenditure as there is a need for a debt reduction, according to Barclays.
"The fiscal position for India appears well managed from a flow perspective, but there is a need for a reduction in debt. We expect the finance minister to signal further fiscal consolidation and provide long-term goals for deficit management to reduce the public debt burden and create more fiscal space," said Barclays.
"For the next fiscal year, we think the push will remain towards supporting growth via higher capital expenditure," the financial firm said.
On February 1, Finance Minister Nirmala Sitharaman will present an interim Union Budget ahead of the General Elections, scheduled for April-May 2024. Another budget will be presented after the formation of the new government.
"We believe Finance Minister Nirmala Sitharaman will detail a medium-term path of fiscal deficit consolidation, while also prioritising capital expenditure," Barclays said.
The global financial firm forecasts India's consolidated fiscal deficit will reach 9 per cent of GDP (central government: 5.9 per cent; states: 3.1 per cent) during FY24. For FY25, Barclays forecasts the consolidated deficit will be 8.3 per cent of GDP.
"For the central government, we expect a fiscal deficit of ₹17.7 lakh crore (5.3 per cent of GDP), raising central government spending to around ₹49.1 lakh crore, up nearly 9 per cent year-on-year (YoY)," Barclays said.
Barclays expects the central government to comfortably achieve its fiscal deficit target of 5.9 per cent of GDP for FY24 and expects the FY25 budget to set a deficit target of 5.3 per cent of GDP.
On subsidies, Barclays expects to see a holding pattern, with the extension of the free food scheme, to be offset by declines in fertilisers and energy support outlays.
Moreover, the financial firm does not expect any major announcements for tax mobilisation and rationalisation, given that robust tax collections are helping to underpin the fiscal consolidation path.
"Buoyancy in tax receipts this year, from both direct and indirect taxes, is likely to result in collections exceeding the budget estimates for FY24. Accordingly, we project tax revenue receipts will grow 15 per cent YoY in FY25, with broad-based growth across direct and indirect taxes," Barclays said.
Read more on Budget expectations here
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Business NewsEconomyBudget 2024 to focus on fiscal consolidation, capital expenditure: Barclays
First Published:11 Jan 2024, 02:57 PM IST
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