Budget likely to stick to fiscal road map: UBS
UBS said in a report on Monday.
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«The higher-than-expected RBI dividend transfer to the government (additional 0.3% of GDP in FY25) would create fiscal leeway to increase populist spending to support consumption for lower income strata (cash transfers, higher rural spending, income tax rationalisation, affordable housing, etc) while continuing its thrust to boost public capex,» said Tanvee Gupta Jain, chief India economist at UBS.
The outcome of the elections suggests weak sentiment at the lower end of the pyramid, she noted. «We expect the central government to remain on the fiscal consolidation path, targeting fiscal deficit at 5.1% of GDP in FY25 and bringing it further down to below 4.5% of GDP by FY26,» Jain said.
The government, in its interim budget, had set a fiscal deficit target of 5.1% of the GDP for the current fiscal.
UBS, however, expects a change in the government's stance on tougher reforms compared to the previous two dispensations. «We think the implementation of tougher reforms, including land reforms, a big boost to infrastructure spending, divestment, farm bills, Uniform Civil Code, and one nation one elections, amongst others, will be challenging,» Jain said.
However, supply-side reforms pertaining to manufacturing, labour laws, and skill development are likely to
