Both President Barack Obama and Republicans in the U.S. House of Representatives have made opening offers in negotiations to resolve the "fiscal cliff."
Moody's Investors Service, while silent on the sovereign rating on the higher-than-expected fiscal deficit numbers, expressed doubts over attaining the higher revenue targets and divestment realisation as assumed in the Budget. The Union Budget 2021-22 has pegged a fiscal deficit of 9.5 per cent for the current financial year as against the consensus 7 per cent, and 6.8 per cent for 2021-22 with a market borrowing of around Rs 12 lakh crore. It also assumes Rs 1.75 lakh crore to be scooped up from divestment.
The government in FY26 Budget should announce an "effective" personal income tax cut to support consumption and demand, Barclays said on Thursday. In its FY25-26 Union Budget preview, Barclays said the key ask from the Budget, to be presented on February 1, is to support growth while adhering to fiscal consolidation path.
Very sensitive items -- such as apples, which carry political weight and are closely tied to farmer interests in states like Himachal Pradesh and Uttarakhand -- may face restricted concessions.
'... that it once again shies away from renewing its commitment to strategic divestment,' points out A K Bhattacharya.
While liquidity in the banking system has turned surplus in the last few weeks, it could go back to deficit again, mainly due to corporate advance tax outflows. The net liquidity surplus of the banking system rose to touch Rs 1 trillion on Tuesday on the back of government spending, according to the data released by the Reserve Bank of India.
The government of India had budgeted to bring down fiscal deficit to 4.8 per cent of GDP in the current financial year, from 4.9 per cent in 2012-13.
'That way you're not hostage just to US sort of exports to India.'
US budget deficit to come down to $583 billion in 2014
'India has the potential to grow at more than 7%, with the monetary policy providing a supportive hand.'
The finance minister has stayed true to her commitment to fiscal consolidation, even though the pace of the decline in the deficit could have been faster, notes A K Bhattacharya.
"The new structure will substantially reduce taxes on the middle class and leave more money in their hands, boosting household consumption, savings and investment," Sitharaman said presenting what was dubbed as 'reformist' budget for the next fiscal in Lok Sabha.
The finance minister could well be on her way to setting a record of achieving the biggest single-year reduction in the government's fiscal deficit, explains A K Bhattacharya.
Trump has made it clear to Prime Minister Modi that India will not be spared from Washington's reciprocal tariffs and emphasised that "nobody can argue with me" on tariff structure.
'If it doesn't, it will continue with measures to infuse liquidity, signalling a new cycle,' predicts Tamal Bandyopadhyay.
'When Prime Minister Modi met President Trump, they agreed to initiate a bilateral trade dialogue.' 'It makes sense to give these negotiations a chance.'
'If the Trump administration decides to put guardrails on H-1B visas, that will surely impact both US and Indian firms.'
'It has also outlived its initial purpose of reducing physical gold imports.'
'There's a misconception that all Rs 1 lakh crore will be spent immediately, leading to higher consumption of FMCG goods, travel, and vehicle purchases.' 'While some of this money will go toward consumption, not all of it will.' 'The impact depends on where people deploy their savings.'
Since Sanjay Malhotra took office as governor in December, the Reserve Bank of India (RBI) has adopted a more accommodative stance, which bodes well for banking and the economy as they navigate a growth slowdown, according to analysts.
Whether she will pare the fiscal deficit target of 5.1 per cent of GDP, using the record dividend received from the RBI, or expand flagship government programmes will be keenly watched.
Fitch on Tuesday affirmed India's sovereign rating at 'BBB-' with a stable outlook, on robust growth and resilient external finances, but said weak public finances remain a challenge. India's rating has been unchanged at 'BBB-', which is the lowest investment grade, since August 2006. "Fitch Ratings has affirmed India's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook," it said in a statement, adding strong growth potential is a key supporting factor for the sovereign rating.
The fiscal deficit for 2015-16 may eventually come down to the targeted level of 3.9 per cent of GDP.
Instead of boosting growth, policy should focus on addressing the current account and budget deficits.
The most striking features of this Budget was its focus on simplification and improving the ease of doing business in India, asserts Kaku Nakhate.
Ashok Chawla outlined the key thrust areas of Budget 2011.
India's fiscal deficit trends are a bit like an alcoholic trying, unsuccessfully, to reform. Virtue does not last for too long, says Shankar Acharya.
The government further said the gross tax revenue as a per cent of GDP is expected to increase to 12.1 per cent of GDP in 2019-20 and stabilise at that level in 2020-21 before climbing up to a level of 12.2 per cent of GDP.
It would be a miracle indeed if we grow at 7/8 per cent a year over the current and next few years, says A V Rajwade
Prime Minister Manmohan Singh on Wednesday termed the budgetary proposals for 2007-08 as anti-inflationary, which aimed to control prices through reduction in excise duty on many items.
Many lawmakers fear that things may get more toxic through a series of bitter struggles expected in next few months over nation's debt and deficit burdens.
The impact of Trump's announcement of increasing import tariffs will have negligible benefit for India not because of companies trying to shift from China to other countries or their supply chains being affected due to their Chinese operations but because of our faulty policies, explains Mudit Jain.
Union Finance Minister Nirmala Sitharaman, along with her team of bureaucrats, delved into the fine print of the 2024-25 Budget documents in a press conference, detailing the government's road map on bringing down the debt-to-GDP ratio and bold tax measures.
India's exports grew by 67.39 per cent to $32.21 billion in May driven by healthy growth in sectors such as engineering, pharmaceuticals, petroleum products and chemicals, according government data released on Wednesday. Exports in May last year stood at $19.24 billion and in May 2019 it was at $29.85 billion, the commerce ministry's preliminary data showed. Imports in May rose by 68.54 per cent to $38.53 billion, from $22.86 billion in May 2020. In May 2019, imports stood at $46.68 billion.
The government should have mentioned clearly the specific structural reforms that were responsible for the deviation from the fiscal deficit target by half a percentage point, says A K Bhattacharya.
Since Obama took office in Jan 2009, US shares have given annualised returns of 19%
Several critics including some rating agencies have doubted prospects of meeting this ambitious fiscal deficit target.
India and the United States will finalize the contours, schedule of negotiations, and terms of reference for a proposed bilateral trade agreement (BTA) during a three-day meeting beginning Tuesday. The agreement is expected to be finalized in two tranches, with the first phase focusing on goods trade. The US team, led by Assistant US Trade Representative for South and Central Asia Brendan Lynch, will be in India from March 25-29 to discuss the agreement. Both countries are aiming to conclude the first phase of the agreement by fall 2025.
