Poll pressure notwithstanding, Budget to stick to fiscal consolidation path: BofA Securities
interim Budget, says BofA Securities.
“The current government’s intent is to consolidate the fiscal deficit through capital expenditure-driven growth instead of expenditure compression. We expect this strategy to continue in FY25 union budget as well,” the global brokerage firm said.
The brokerage also expects the Centre to meet its fiscal deficit target of 5.9% of GDP in FY24.
Between April and November of the current fiscal year, the government used up 50.7% of the budgeted fiscal deficit target for the full year, which is quite less than the median 75.9% of the total that usually gets exhausted in this period, BofA pointed out.
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This was because of higher than median revenue receipts despite a fairly higher expenditure.
“For the remainder of FY24, we 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.
Interestingly, the growth in the government’s capital investment at 31% YoY in April-November was sharply higher than the 10-year average seen in this period. This is because various ministries such as road, transport and highways, railways, and defence have been frontloading their capital expenditure in the run-up to general elections.
Further, both corporate and income collections have surpassed their budgeted growth rates meaningfully, more than offsetting the disappointment seen in
