Indian Minister of Finance Nirmala Sitharaman left the ministerial budget on July 23, 2024 in the Parliament of New Delhi, India.
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As the Indian government takes a close rope between financial prudential and recovery growth, experts believe that it may reduce the budget of the year, rather than expenditure for turbocharged Asia’s third largest economies.
Economists of investment banks say that in the fiscal year as of March 2026, the Indian government can reduce the fiscal deficit target 50 basis points to 4.4 % of the country’s GDP, accounting for 4.9 % of the goals of the fiscal year. Essence
They also predict that the government will set nominal GDP growth goals in the next fiscal year.
Indian Finance Minister Nirmala Sitharaman will propose a national budget on February 1st Power in JuneEssence
Budget is a weak domestic demand in the background of the fifth largest economy in the world, and its domestic demand is weak, and the growth of rupees and global uncertainty.
Economic slowdown is largely attributed to such as such as Non -seasonal rainfall, fiscal tightening As the central bank takes measures to curb the growth of unsecured loans, the credit growth of the private sector is privatized.
Goldman Sachs Sax said that the upcoming budget may re -emphasize the employment growth of the labor -intensive manufacturing industry, while promoting other steps for rural housing plans and controlling price fluctuations.
DBS senior economist Radhika Rao said that with the slowdown of domestic consumption and economic activities, the budget may be concentrated in “fine -tuning existing measures and the improvement of mid -term demand”.
RAO added: “Tax reduction (also) the highest ranking … even if the personal income tax rate or standard exemption will affect a small number of people, it may have some support.”
She said that in order to promote consumption, it is expected that the central government will reduce personal income tax of middle -income families, and at the same time continue to consider infrastructure expenditure, upgrade the country’s roads, railways, airports and highways.
Failure to concentrate
After the popularity period soared to 9.2 % of GDPIn recent years, the Indian government has been steadily reducing its budget deficit, which is a key requirement for the country to win credit rating and upgrade.
Standard & Square Global Rating The prospect of sovereign rating in India increases in May “Confirmation” from “stability”, while retaining the country’s credit rating “BBB-” – Its minimum investment level -Fimid the country’s strong economic expansion and political commitment to fiscal merger.
Minister of Finance promises Her July budget speech reduced the deficit In this fiscal year is 4.9 %, the next fiscal year is 4.5 %. She said: “From 2026-27, our efforts will be to keep the fiscal deficit each year, so that the central government debt will decrease with GDP percentage percentage.”
It is expected that the government’s deficit in this fiscal year will be less than 5 %, part of the reason is Thanks to the record of $ 25 billion From the central bank. Nomura economists attribute it to the “sharp decline” of capital expenditure.
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In the past seven years, according to Goldman Sachs’s calculation, the Indian government has been fully utilized an average of 80 % of the available funds per year under the condition that the Indian government has passed the budget and additional expenditure approved by supplementary gift funds. It said that when the government surpassed the budget subsidy, it rose to pay for food prices, and this defect narrowed its popularity.
Investment banks predict that the government’s public expenditure will be further reduced in the next few years, and the annual fiscal year of 2025-26 will be reduced to 3.2 % of GDP.
It said that the financial discipline will “delay the growth of the next fiscal year”, which shows that “the fastest growth rate in public capital expenditure is behind us … In general, there is no room for increased welfare expenditure.”
Economic slowdown
Global The fastest growing major economy Already fell. After economic growth, India has been steadily cutting the actual GDP forecast throughout the year Miss the expectation In the quarter of September, it increased by 5.4 %, which was the slowest expansion in the past two years.
The government has adjusted the economic growth prospects of this fiscal year to the slowest level in the past four years. Previously, the three rounds of cutting made the estimated value estimate 6.4 % early this month From 7.2 % October.
In the next fiscal year, Nomura analysts said that the government may set the nominal GDP growth target to 10.3 %, higher than the 9.7 % fiscal year as of March 2025.
However, I hope that Sitharaman can provide a large fiscal package so that the economy may be disappointed in the recent soft stickers in the upcoming budget.
SHAH added that although there are some other “adaptive tax and expenditure measures” on the card, they may be “fragmented.”
Currency relaxation
Since February 2023, Indian Reserve Bank has maintained interest rates. However, the sharp growth of India’s economic growth has made the task of central banks more difficult.
With RUPEE’s low record of Greenback, any reduction of bank policy interest rates may cause further increase in domestic inflation, which has caused further pressure on the currency, and may trigger capital outflows.
India’s consumer price inflation is already 6 % tolerance for the central bank. Come in December 5.22 % and November 5.48 % – It violated the upper limit in October -Super with some lower price space for RBI.
Tanvee Gupta Jain, chief Indian economist at UBS, said the Indian Reserve Bank (RBI) faced a “difficult choice” and added that she hoped that about 75 basis points of the “shallow currency loose cycle” of the February policy meeting in February Essence
However, the Central Bank said last month that the status of currency may remain urgent for a period of time, and at the same time considers further inflation pressure.
Indian observers have been on TenceHooks in possible action President Donald Trump put forward the idea of ​​universal tariffs during the campaign.
trade The surplus of the United States and the United States is nearly $ 42 billionEssence
The US trade policy framework under Trump’s second presidential term can enhance the yield of US dollars and Treasury, which increases US interest rates longer. That’s Make the policy of the Central Bank of Asia to complicate, Including the Indian Reserve Bank (RBI), the growth of the loose policy will mean the difference in interest rates.
Investment goal
Some investors will focus on part of the budget that the government has revoked shares in state -owned entities.
India is looking for CUT’s investment and asset monetization goals This month reported earlier this month that this fiscal year was less than 300 billion rupees (or less than 300 billion U.S. dollars) from 40 % (or less than 300 billion U.S. dollars) from 500 billion rupees (or less than 300 billion U.S. dollars) from the 500 billion rupees.
UBS’s Jain said that compared with the government’s budget, it is estimated that it is 500 billion rupees, and the withdrawal of the capital receipt is “backward this year”, which is 90 billion rupees.
She hopes that the government will reduce the goal to 300 billion rupees in the next fiscal year.
