The Reserve Bank of India (RBI) will make its bi-monthly policy announcement next week. The macroeconomic backdrop to this event is perhaps the most reassuring in the past several quarters.
The government should have mentioned clearly the specific structural reforms that were responsible for the deviation from the fiscal deficit target by half a percentage point, says A K Bhattacharya.
To make possible discretionary spending including capex and that on welfare, the government decided to borrow more than planned in FY21 -- Rs 12.7 trillion.
US President Barack Obama hailed the budget deal, which if approved by the Congress, would avoid government shutdown for at least two years.
India's economy has bounced back amazingly from the Covid-19 pandemic and nationwide lockdown over the last one year, but it is not out of the woods yet, according to the World Bank, which in its latest report has predicted that the country's real GDP growth for fiscal year 21/22 could range from 7.5 to 12.5 per cent.
Stating that a weak fiscal position continues to constrain India's sovereign ratings, Fitch said the next government's medium-term fiscal policy will be of particular importance from a rating perspective.
'The finance ministry's decision to accept the deficit target of 4.5 per cent in 2025-2026 appears to have emanated from its endorsement of the Finance Commission's view that the Indian economy will continue to remain impacted by the pandemic, adversely undermining its growth potential,' notes A K Bhattacharya.
Obama said for the last several months he has been calling for a balanced approach to deficit reduction that combines some tough spending cuts, and a tax reform agenda that without raising tax rates further could in fact raise sufficient revenues that combined would yield about $1.5 trillion in deficit reduction over the next decade.
'Since the bilateral deficit is a reality -- and a worry -- we need to find a way to deal with it,' says Ravi Bhoothalingam.
Confident of improving the job prospects for rising middle-class in the country, the US has said it will continue to push for stronger job creation as it is poised for self-sustaining, broad-based growth.
The agreement includes a balance of spending cuts and revenue increases.
The fiscal deficit for 2015-16 may eventually come down to the targeted level of 3.9 per cent of GDP.
Both President Barack Obama and Republicans in the U.S. House of Representatives have made opening offers in negotiations to resolve the "fiscal cliff."
Since Obama took office in Jan 2009, US shares have given annualised returns of 19%
An influential American Senator has moved a Congressional amendment to strip all US aid to Pakistan, Egypt and Libya -- totalling about $4 billion per annum -- and divided the fund equally for veterans jobs bill and deficit reduction programme.
The government has been waiting for the expansion by the private sector, Finance Minister Nirmala Sitharaman said while reminding India Inc of various measures including corporate tax rate cut, policy consistency, ease of doing business, among others to facilitate investment.
A Spanish public prosecutor has accused Cameroon striker Samuel Eto'o of conspiring to evade 3.5 million euros in taxes owed on income from his image rights when he was playing for Barcelona between 2006-2009.
Budget-makers in North Block are looking to maintain this fiscal status quo, in spite of tax revenues nowhere close to where the government wants and in spite of possible higher expenditure commitments.
But it is disappointing to note that Sitharaman's third Union Budget continues to promote a few problematic ideas, observes A K Bhattacharya.
While most experts suggest the government loosen its purse strings and not worry about the fiscal deficit in a pandemic impacted year, it will be a tightrope walk for the government to increase spending without going overboard.
The Centre has projected reining in its fiscal deficit at 3.3 per cent of GDP in FY19.
'The economy is suffering (perhaps 'enjoying' is a better word) the lowest credit demand in decades; banks are struggling with stressed loans equivalent to near 10 per cent of GDP,' points out Devangshu Datta.
Why India is an attractive investment destination
On the basis of Budget projections, the Centre needs Rs 7.3 trillion revenue during December-March and its expenditure must be limited to Rs 6.7 trillion.
Fiscal consolidation is keenly awaited.
In her Budget for the fiscal year beginning April 1, she restricted tax-free interest on retirement fund to Rs 2.5 lakh annually but gave tax exemption on leave travel concession subject to incurring of specified expenditure. A new Agriculture Infrastructure and Development Cess will be imposed from Tuesday on customs duty levied on bullion, alcoholic beverages, coal and agri products ranging from apple to lentil. But to reduce the burden on consumer, customs or import duty on these items was cut.
Do the actual numbers bear out the claims made by the government or do they suggest something else? asks A K Bhattacharya.
Indian bond yields may not spike if the government opts to increase spending when it unveils its annual budget in late February.
With an eye on the adverse fallout of rising oil prices, the Reserve Bank of India (RBI) on Monday said the government's subsidy bill for petroleum products and fertilisers might cross the projections for 2011-12 and put fiscal consolidation plans under strain.
The comments by the minister came following a controversy over the reduction of syllabus by the CBSE due to the COVID-19 situation, with the Opposition alleging that chapters on India's democracy and plurality are being "dropped" to propagate a particular ideology.
In the last five years, imports from HK have more than tripled -- from $5.6 billion in FY15 to $17.1 billion in FY20. In the same period, exports declined by 20 per cent -- from $13.6 billion in FY15 to $10.8 billion (annualised) in FY20.
After a contraction in the current financial year, India's economy is forecast to bounce back with a sharp growth rate of 9.5 per cent next year provided it avoids further deterioration in financial sector health, Fitch Ratings said on Wednesday. The coronavirus pandemic will lead to shrinking of the already slowing economy in 2020-21 that started in April. Fitch Ratings forecast a 5 per cent contraction in the GDP in the ongoing financial year.
The budget-making exercise offers golden opportunities despite challenges, observes Shankar Acharya, former chief economic adviser to the Government of India.
Experts pointed out the move will only help taxpayers temporarily, as the tax liability remained the same and the date for advance tax has not been extended.
FM's top adviser Raghuram Rajan had earlier said that the target was tough to meet.
Thomas Isaac has been in and out of the national news in his role as Kerala's finance minister since 2018 for various path-breaking tax initiatives. But it is 2020 that he has become more prominent, principally in the GST council.
Under the scheme, also called the Export Credit Insurance Scheme, the insurance guaranteed could cover up to 90 per cent of the principal and interest.
© 2025 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances