Union Budget for FY23 likely to aim at boosting growth, achieving fiscal consolidation: BoB eco research
Kolkata: In view of upcoming state elections, the Union Budget for the 2022-23 financial year will aim at boosting growth, achieving fiscal consolidation and driving consumption, Bank of Baroda (BoB) said in its latest economic research report.
It also stated that there could be changes in tax concessions, while production-linked incentive (PLI) schemes may see higher allocation to push investment demand.
To avoid bond market volatility, gross borrowing will likely be maintained in the range of Rs 12-13 trillion, despite higher repayment obligations. Thus the estimated fiscal deficit is expected to be between 6 per cent and 6.25 per cent in the 2022-23 fiscal, the report said.
In line with a 13 per cent increase in nominal Gross Domestic Product, the Centre’s net revenue is estimated to rise by 12.2 per cent and spending to increase by 4.5 per cent in the coming fiscal, it said.
Assuming that a large part of the divestment target in the current fiscal will be met, the expected disinvestment proceeds in the next financial year will be around Rs 750 billion, the report claimed.
According to it, the fiscal deficit will be financed by market borrowing next fiscal.
The report also mentioned that the gross tax revenue to GDP ratio is expected to remain broadly unchanged.
Higher nominal GDP will imply that gross revenue will increase to Rs 26.5 trillion in the next fiscal from Rs 22.2 trillion as per current fiscal budget estimates.
The upcoming budget may focus on increasing the standard deduction limit for the salaried class by Rs 50,000. Overall, there could be a balance between consumption and investment centric policies, the report added.