Photographer: Sumit Dayal / Bloomberg
Photographer: Sumit Dayal / Bloomberg
India’s annual budget on Monday is the chance for Prime Minister Narendra Modi to boost demand and investment in an economy cratered by the world’s second largest coronavirus outbreak.
Finance Minister Nirmala Sitharaman will outline her government’s growth center plans when she gives the budget speech at 11:00 in New Delhi. She is expected to set aside more money for health care and infrastructure development and partly pay for it by raising record amounts by selling stakes in state-owned companies.
Read: India slows 11% GDP growth in fiscal 2022 helped by vaccination system
Although the success of the budget depends on how effectively India can contain growing infections through vaccines in the country of more than 1.3 billion people, here are five key numbers to note in the spending plan:
Nominal GDP
The Indian economy is expected to recover next year
Source: Bloomberg, Indian Government
The IMF India’s economy is forecast to expand 11.5% in the year beginning April, which is higher than the 9.2% estimated in a Bloomberg survey. Add inflation of about 4.5% to these projections, and you get a nominal growth rate of the gross domestic product in the region of almost 14% -16%. The number is the most important, as the assumptions of the budget for income and expenditure are based on this. Some economists, including Samiran Chakraborty of Citigroup Inc., expect nominal GDP to be linked to 15% – the bearish end of the group.
Tax revenue
India’s tax revenue is expected to grow by 19% next year
Source: Citi Research, Government of India
India’s tax collection has shown a recent rise as the economy gains momentum following the lifting of barriers to the coronavirus outbreak. That should give Sitharaman reason to set total tax revenue at a level higher than the 16.3 billion rupees ($ 223 billion) budgeted for the current year.
Citigroup expects a 19% year-on-year increase in gross tax revenue next year, with healthy goods and services tax revenue increasing overall collection. It expects the GST next fiscal to average 1.15 trillion rupees per month, translating nearly 14 trillion rupees in total in the year. Higher excise taxes, especially from the sale of petroleum products, and robust corporate tax collection, thanks to a recovery in the company’s earnings, will also help.
Spend pressure
Government investment has taken a hit in recent years
Source: Government of India, Bloomberg
A labor market paralyzed by the impact of the pandemic and growing inequality will put pressure on Sitharaman to cut spending on everything from infrastructure projects to the social sector and health care. While economists surveyed by Bloomberg see that government investment, as reflected by gross fixed capital formation, will rise by 11.2% next financial year, analysts at Credit Suisse see that the finance minister is spending 20% of total -21% increase from 30.4 trillion rupees budgeted for the 12 months to March. That increase can help boost growth.
Ring sale
India has only reached its disinvestment target twice in nine years
Sources: Department of Investment and Public Asset Management, India’s Budget
The sale of interests in state-owned companies can be a sure way to raise money in the new year. After the pandemic destroyed the government’s plan to raise 2.1 billion rupees through sales in the current fiscal, it could push the target forward and pursue record revenues from acquiring shares in companies, including Life Insurance Corp. ., In the.
Citigroup expects the Modi government to double next year’s non-tax revenue of about 6 trillion rupees, from about three trillion rupees for the current period. A further source of revenue is the auction of 5G airwaves, in addition to an annual dividend of about 800 billion rupees – from the Indian central bank, Citigroup said.
Fiscal deficit
India’s budget deficit will reach its target for a fourth consecutive year
Source: Government of India, Bloomberg Surveys
With the pandemic disrupting the government’s fiscal mathematics, Sitharaman is nowhere near reaching the 3% budget gap set by law. Economists polled by Bloomberg predict that it will target a 5.5% of GDP deficit next year after probably increasing to 7.25% in the current year.
According to a Bloomberg survey, New Delhi could announce a gross loan plan of 10.6 trillion rupees. Although it will be lower than this year’s record of 13.1 trillion rupees, the amount will be 75% above the previous five’s average.
– With the help of Manish Modi and Tomoko Sato