Budget To Focus On Spend, Spend, Spend, Say Experts

India, which is set to regain the worlds fastest-growing major economy title, will likely prioritize growth over fiscal consolidation by boosting spending, according to economists surveyed ahead of Tuesdays presentation of the nations Union Budget.

India, which is set to regain the world's fastest-growing major economy title, will likely prioritize growth over fiscal consolidation by boosting spending, according to economists surveyed ahead of Tuesday's presentation of the nation's Union Budget.

Finance Minister Nirmala Sitharaman will probably increase the budget by about 14% year-on-year to Rs 39.6 lakh crore ($527 billion) in the fiscal year beginning April, according to the median of estimates compiled by Bloomberg. She is expected to leave tax rates largely unchanged, and instead rely on income from asset sales and a near-record borrowing of about Rs 13 lakh crore to partly fund the plan, the survey showed.

Elevated expenditure will, for yet another year, keep the government's budget deficit wider than 6% of gross domestic product. Economists predict Sitharaman will target a fiscal gap of 6.1% of GDP next fiscal year after ending the current year with a 6.8% shortfall, thanks to looser spending to see the economy through the pandemic.

“The recovery from the pandemic has been swift but incomplete,” Dhiraj Nim and Sanjay Mathur, economists at Australia & New Zealand Banking Group Ltd. wrote in a report. “A fine balancing act between fiscal retreat and economic recovery is thus needed.”