India is set to present an annual budget topping $500 billion Tuesday, in one of its most keenly watched economic events seen pivotal to sustaining the nation’s recovery from pandemic-induced disruptions.
Finance Minister Nirmala Sitharaman is expected to channel more spending toward policies that create jobs, boost manufacturing and also benefit the poor. The growth-boosting focus may leave the government with a budget shortfall equivalent to 6.1% of gross domestic product in the year beginning April, analysts predic, reports Business Standard.
While the fiscal deficit forecast is narrower than the 6.8% gap targeted for the current fiscal year, it’s far wider than the shortfall seen in pre-pandemic years. Sitharaman is expected to propose borrowing a near-record 13 trillion rupees ($174 billion) to bridge the gap when she presents the budget at 11 a.m. in New Delhi.
Higher spending through the pandemic has brought India on the cusp of regaining its world’s fastest-growing major economy title from China in the current fiscal year. The government has the fiscal space to spend money on asset creation, and keep the economy on track for another year of world-beating 8%-8.5% expansion, the finance ministry said in a report Monday.
The finance minister will likely continue her reliance on income from sale of state assets to boost revenue, although there’s no guarantee of success. Her plan to list Life Insurance Corp. of India — the country’s premier insurer with nearly $500 billion in assets and a valuation estimated as high as $203 billion — in the current year is yet to come to fruition.
Other key numbers to watch for in the budget include projected increase in tax collections, dividend from the central bank and state-run companies, any changes in import levies as part of the government’s plan to boost manufacturing, and allocation toward subsidies, particularly for fertilizer makers.
Markets and investors would be closely monitoring the budget for any progress on a plan to include India’s debt in the global indexes as it hinges on a tax waiver to overseas investors. They would also be looking for clues on the government’s stand on the use and regulation of crypto assets.
Source: United News of Bangladesh