Bimal Jalan, has recommended to the government that it cut fiscal deficit to 3.6 per cent of the GDP during 2015-16.
Foreign portfolio investors (FPI) flows have turned positive on a trailing 12-month (TTM) basis for the first time since December 2021. Thanks to robust inflows over the past three months, the TTM overseas flows into domestic equities stand at over $7.3 billion-the most since November 2021. This has helped propel one-year Nifty returns to 12 per cent.
'We had tremendous faith in honorable Modiji in his second term as he was well-settled. Sadly that has been belied.'
'The BJP's real weapons are Hindutva, organisation and finance.'
In the coming months, globally as well as in India, rice might remain a hot potato.
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Rupee ends flat after hitting 9-1/2 month low.
The Union government could target a fiscal deficit of 5.8-6 per cent of nominal GDP for 2023-24, and it should continue its capital expenditure push and look to simplify the personal income tax regime, economists recommended Finance Minister Nirmala Sitharaman and her team during their pre-Budget interaction on Monday. Starting last week, Sitharaman had eight pre-Budget consultations this time. More than 110 invitees representing seven stakeholder groups participated in these meetings, the finance ministry said in a statement. The stakeholder groups included representatives and experts from agriculture and agro-processing industry; industry, infrastructure & climate change; financial sector and capital markets; services and trade; social sector; trade unions and labour organisations; and economists.
Within three trading sessions in May, foreign portfolio investors (FPIs) have pumped in Rs 9,461 crore into Indian equities. This follows net inflows worth Rs 7,936 crore in March, and Rs 11,631 crore in April. The trend, analysts said, could continue going ahead as the US Federal Reserve may soon halt its interest rate hike cycle, which will strengthen foreign fund inflows into emerging markets, including India.
Indian bond yields may not spike if the government opts to increase spending when it unveils its annual budget in late February.
The health of Indian banks continued to improve in 2021-22 with their balance sheet growing at double digits after a gap of seven years and their asset quality and capital position bettering, the Reserve Bank of India (RBI) said in its annual report on trend and progress of banking in India. At the same time, the banking regulator flagged the issue of slippages from restructured accounts. "Going forward, it is imperative that banks ensure due diligence and robust credit appraisal to limit credit risk," the report said.
Finance minister Nirmala Sitharaman on Wednesday exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India. Replying to the debate on first batch of Supplementary Demands for Grants 2022-23 in Lok Sabha, the finance minister said inflation has come down and it is now in the tolerable band of the RBI. Inflation has been declining since April 2022 and it is declining further, she said.
Twelve of the 36 meteorological subdivisions recorded deficient rainfall, while the rest witnessed normal to excess rain. In total, 38 per cent of the 662 districts received below-normal rain.
'The economy is suffering (perhaps 'enjoying' is a better word) the lowest credit demand in decades; banks are struggling with stressed loans equivalent to near 10 per cent of GDP,' points out Devangshu Datta.
Do the actual numbers bear out the claims made by the government or do they suggest something else? asks A K Bhattacharya.
'But can it afford to present a scenario within the existing legal framework of fiscal consolidation?', asks A K Bhattacharya.
FM is seen to step up the pace of sales of state assets and curb spending
'If because of El Nino, the monsoon is affected adversely in the current year, naturally it will affect income projections and consequently Budget numbers.'
Stating that a weak fiscal position continues to constrain India's sovereign ratings, Fitch said the next government's medium-term fiscal policy will be of particular importance from a rating perspective.
As the FM said, this is a Budget that lays the foundation for the next 25 years, observes Kumar Mangalam Birla.
Industry body CII has pitched for a reduction in personal income tax rates, decriminalisation of the goods and services tax and a relook at the capital gains tax rates as part of its agenda presented to the government for the forthcoming Budget. Arguing that the GST law already contains adequate penal provisions for deterrence against evasion of taxes, CII has suggested decriminalisation of GST law. Also, the applicability of prosecution provisions should not be based on the absolute amount of tax evasion but should be based on real intent to evade the taxes and a certain percentage of the tax payable, it stated.
The government has hiked gold import duty to 15 per cent from 10.75 per cent to check the current account deficit (CAD) and rising import of the yellow metal. The duty changes came into effect on June 30. Earlier, the basic customs duty on gold was 7.5 per cent, now it will be 12.5 per cent.
On the rupee, it expects some appreciation pressure on in the near term from greater portfolio flows.
Finance Minister Nirmala Sitharaman will have to do a tight-rope walk between staying fiscally prudent and general public expectations of lower taxes and a wider social security net, while at the same time firing the engines of the economy before general elections. Sitharaman will on Wednesday present her fifth straight Budget at a time when the economy is slowing due to global headwinds and specific sectors need attention. In the run-up to the Budget presentation, expectations are rife that she may tweak income-tax slabs to provide relief to the middle class and increase spending on the poor through programmes such as the rural job scheme while ramping up financial incentives for local manufacturing.
US President Barack Obama hailed the budget deal, which if approved by the Congress, would avoid government shutdown for at least two years.
Although India's share in the world toy trade has marginally improved, it still lags behind China's. Toys are not China's main item of export, but about two-thirds of the toys sold globally are from China. The world exported toys worth $73.2 billion in 2021: China accounted for 66.2 per cent, or $48.5 billion of that, out of which mainland China made up $46.1 billion and Hong Kong $2.4 billion.
The budget-making exercise offers golden opportunities despite challenges, observes Shankar Acharya, former chief economic adviser to the Government of India.
Budget for 2022-2023 has returned to its agenda for protectionism in the name of creating a self-reliant India, points out A K Bhattacharya.
Senior tax officials were told to focus on cash collection from the arrears so that the target for FY23 was achieved and the overall revenue position improved.
'I'm pitching India for the strengths we offer, including the English language, engineers, doctors, nurses, professionals, innovative talent of startups.'
The external environment has worsened further. While the Finnish economy entered into a recession, Swedish economic growth also dipped. The Finnish gross domestic product (GDP) dropped 0.6 per cent in October-December, 2022. It was the second quarter of negative growth, which is a technical definition of recession.
The challenge before the government now is to use the factors that are favourable to its benefit.
India's current account deficit is expected to deteriorate in the current fiscal on account of costlier imports and tepid merchandise exports, according to the Finance Ministry's monthly economic review. The review released on Thursday by the ministry also said that global headwinds would continue to pose a downside risk to growth as crude oil and edibles, which have driven inflation in India, remain major imported components in the consumption basket. For the present, it said, "their global prices have softened, as fears of recession have dampened prices somewhat. This would weaken inflationary pressures in India and rein in inflation."
Fiscal consolidation is keenly awaited.
Macroeconomic management is usually a lot more comfortable with lower fiscal deficits. The sooner we get there, the better for the economy, says former Chief Economic Adviser to the Government of India Shankar Acharya.
It would not be surprising if India, the world's largest producer of milk, has to resort to imports to meet the elevated summer demand, states Surinder Sud.
RBI's surprise rate cut has revived sentiments of India Inc.
Low consumer demand, a slide in investments and troubles in the banking sector should prompt the government to recalibrate taxes and expenditure. It is also important to ramp up spending on health care and education, says CII president Sumit Mazumder.
But their trajectory and direction have been largely influenced by politics and the political leadership's understanding of how the economy needs to be managed, explains A K Bhattacharya.
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