Kolkata:
With several parliamentary elections looming, the union budget for 2022-23 could focus on boosting growth, achieving fiscal consolidation and boosting consumption, Bank of Baroda (BoB) said in its latest economic research report.
The lender also noted that there could be changes in tax breaks, while production-related incentive schemes (PLI) may see a higher allocation to boost investment demand.
Gross borrowings may remain in the range of Rs 12-13 trillion to avoid bond market volatility despite higher repayment obligations, the report said. For example, the estimated budget deficit in 2022-23 is expected to be between 6 and 6.25 percent.
In line with a 13 percent increase in nominal Gross Domestic Product (GDP), it is estimated that the Center’s net revenue will increase by 12.2 percent and spending will increase by 4.5 percent in the coming fiscal year. rise, it said.
Assuming much of the divestment target will be achieved in the current fiscal year, the expected divestment proceeds in the next fiscal year will be around Rs 750 billion, the report claimed.
According to it, the budget deficit will be financed by market loans next fiscal.
The report also noted that gross tax revenue relative to GDP is expected to remain broadly unchanged.
A higher nominal GDP will imply that gross revenues will rise to Rs 26.5 trillion in the next fiscal year, from Rs 22.2 trillion according to current budget estimates.
The forthcoming budget may focus on increasing the standard deduction limit for the salaried class by Rs 50,000. Overall, there could be a balance between policies targeting consumption and investment, the BoB noted in the report.