For FY24, fiscal deficit is expected to be projected at 5.8% of GDP
Download ReportFY24 Budget Preview - Preserving India’s economic resilience
The FY24 Union Budget will be presented against the backdrop of a hostile global environment. It is unlikely that India will remain unaffected by such global polycrisis, though resilience in domestic consumption and investment may help tide this upheaval better. Fiscal policy will have to tread a tight ropewalk between being prudent (i.e., continue to consolidate) and supporting growth. We expect the central government to continue to phase out pandemic era exceptional expenditure, and focus on public capex, incentives to support consumption and exports along with social infrastructure of health and education.
For FY24, fiscal deficit is expected to be projected at 5.8% of GDP – a consolidation of 60 bps vis-à-vis the FY23 target of 6.4%, which we expect to be maintained. Although this is expected to result in almost unchanged size of net g-sec borrowing at around Rs 11.0 trillion, record high gross borrowing could be a sentiment dampener in the near term. Any guidance on India’s inclusion in the global bond indices could however provide a pleasant surprise.