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Budget 2016: The present economic condition warrants that budget focuses on agriculture, banking and employment intensive unorganized sector. Government must amend the tax system to ensure that India evolves into a vast integrated domestic market thus reducing our dependency on rest of the world for growth.
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Budget 2016 expectations: In FY17, cyclical expenditures in total expenditure may be around 0.5% of GDP. We expect the Government to keep Core Fiscal Deficit at 3.5%, but make a provision of at least 0.3% outside the budget. Thus the Effective Fiscal Deficit for FY17 may be set at 3.8% of GDP.
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Budget 2016 expectations: We would also like the Government to make a clear communication that it is committed to the path of fiscal consolidation. Our revenue deficit numbers are coming in at 1.9% of GDP, clearly indicating we should not be unduly bothered about the overall fiscal deficit as quality of fiscal consolidation looks satisfactory.
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Budget 2016 expectations: We are thus surprised that there is so much hullabaloo about the Government Finance numbers. On a lighter note, may be as always, people are more shouting from the roof top without even bothering to look at the numbers!
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Budget 2016 expectations: For the next fiscal (FY17), we expect a 14.9% growth in tax revenues, primarily robust growth in income tax (18%) and service tax (25%), helped by a possible increase in service tax from 14.5% to 16%. Capital receipts, on the other hand may decline marginally due to low disinvestment target compared to the current fiscal over-optimistic target of Rs 69,500 crore.
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Budget 2016 expectations: We expect Government would keep a realistic disinvestment target of Rs 30,000 crore for FY17. Nominal GDP growth is at 9% for FY17 For FY17, net market borrowing is expected to move down to Rs 4.33 lakh crore (-3.2% compared to FY16) with gross borrowing at Rs 6.14 lakh crore after adjusting for net redemptions of Rs 1.81 lakh crore.
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Budget 2016 expectations: We expect a clear agenda for revival of the banking sector in the budget. These must include among others, setting up of a bad bank, an aggressive roadmap for recapitalization, bringing down Government ownership in PSBs, incentivizing public savings, tax breaks for IFSC banking units and making wilful default a criminal offence.
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