Budget 2024 expectations: Fiscal consolidation is to continue in FY25 despite poll pressure, says BofA Securities.

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Also Read- Budget 2024 expectations: GJEPC advocates import duty cuts, licensing reforms for gems & jewellery sector BofA Securities said that between April and November in FY24, India used up 50.7% of the full-year budgeted fiscal deficit target, which compares well versus the median 75.9% of the total that gets exhausted during April and November usually BofA Securities said that even as total expenditure continued to trace the median run rate, the outperformance was led by higher than median revenue receipts. They see higher than budgeted tax and non-tax revenue to more than offset- the potential shortfall in divestment proceeds, higher than budgeted subsidy bill, modestly higher interest expense and other revenue expenditure. BofA said that the concerns surrounding fiscal slippage in an election year are understandable.

However in their earlier report, BofA Securities had looked at multiple macro variables a year before, during and after national polls. They failed to establish any correlation between macro performance and elections. Also Read-Budget 2024: Standard deduction should be raised to ₹65,000, says Deepashree Shetty of BDO India Hence after Government meeting its fiscal deficit target of 5.9% of the GDP for FY24, they expect Centre’s fiscal deficit to consolidate to 5.3% of GDP and tracking the glide path to 4.5% of GDP by FY26.

Over the last 10 years, on an average 65% of fiscal deficit for the Centre has been funded via market borrowings, as per BofA data. The trend is likely to remain largely unchanged. .