Finance Minister Nirmala Sitharaman will keep on the path of fiscal consolidation and opt for narrowing the FY24 fiscal deficit to as low as 5.8 per cent in the upcoming Budget, analysts said on Tuesday. The government may go for a fiscal deficit number which will be far lower than the 6.4 per cent of GDP budgeted for FY23, they said, pegging the Budget figure for the next fiscal in the range of 5.8 - 6 per cent. Given the fact that this will be the last full Budget of the present government, there may be a temptation to make it into an expansionist one.
One of India's main export destinations, the euro zone, is struggling to revive its economy and battling disinflation.
The government's capex spend is expected to rise and much of this is likely to be focussed on rural India, particularly for housing, roads and irrigation.
Following are comments from economists at leading financial institutions, banks and rating agencies on the interim Budget:
'The real estate sector has been badly bruised because it has become too reliant on funding from NBFCs, including housing finance companies. 'When the NBFC industry was rocked late last year by a large default, the real estate sector was hit hard. 'An intricate web of links between rural incomes, construction activity and shadow banks are fuelling the economic slowdown', says Pranjul Bhandari.
The headline HSBC India Purchasing Managers' Index -- a composite gauge designed to give a single-figure snapshot of manufacturing business conditions -- stood at 54.5 in December, up from 53.3 in the prior month.
A figure above 50 indicates that the sector is expanding, while a figure below that level means contraction.
The RBI left interest rates unchanged, saying there was no substantial development on inflation or fiscal fronts to warrant a fresh reduction.
According to bankers and economists, there is room for further rate cut by the RBI as retail and wholesale inflation rates have remained benign.
But lower growth numbers in the quarters to come may not mean renewed weakness in the economy at the ground level, says Pranjul Bhandari.
India's manufacturing PMI rose to 54.5 in December, 2014, while in the corresponding period a year ago it stood at 50.7, just above the crucial 50 mark which separates growth from contraction.
Insufficient rainfall will have a negative impact on the economy.
Prices of perishable items could spike in the near term.
The Reserve Bank may cut key interest rates as early as this week.
The move to ban Rs 500 and 1000 notes may not curb the root cause of black money.
The markets will be eyeing the amendments.
Economists caution that the underlying cause could be an alarming drop in demand -- something that's not good for economic growth.
Low home loan rates by banks could put large players in an advantageous position over smaller non-bank players, believe analysts.
The poll of over 30 economists, taken in the past week, showed Asia's third largest economy will expand 7.8 percent in the fiscal year ending March 2017.
Analysts say markets to be impacted by monsoon, inflation trajectory.
"If there is proper debate in parliament, followed by a vote, then even without the Congress' support, we have a chance to pass it," says Union Minister of State for Finance, Jayant Sinha.
This was the near-unanimous replies of 10 market participants.
The central bank had nudged banks to cut lending rates.
Beyond the macro data, there has been little enquiry into the profile of the indebted farmer households, says Shailesh Dobhal.
FY17 GDP growth faces cash crunch heat
The broader markets, however, outperformed their larger peers.
One Rank One Pension (OROP) will have a significant impact on the country's fiscal bill and the overall cost will be around Rs 16,000 crore.
Pranjul Bhandari, Chief India Economist, HSBC, speaks about a range of issues ranging from inflation, to how Goods and Services Tax and land acquisition bills can help India hit double digit growth, and her impressions about economic growth in the last one year after Narendra Modi took over as India's Prime Minister.
The muted CPI inflation print at 5% earlier this week, followed by a similar WPI number released Wednesday, seems to have spurred India's central bank into action, is how the economists are reading into Reserve Bank of India governor Raghuram Rajan's 25 basis point cut in repo rate.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances