Union Budget 2018: Fiscal Prudence Vs Populist Budget

Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    With several key Indian states going to elections in 2018, the government would worry about rural distress. The government will have to woo back the farmers and the rural population, especially the small businesses.

    Union Budget 2018: Fiscal Prudence Vs Populist Budget

    In doing so, it may not necessarily be able to walk the path of fiscal prudence. In all probability we will see the fiscal deficit being breached beyond the targetted levels of 3.2 per cent of GDP for 2017-18. Some see the number going-up sharply to 3.5 per cent.

    However, what would eagerly be watched are the estimates for 2018-19. This would be the last full-fledged Union Budget for the present government and hence the government could dole out extra. While the middle class could be given some tax breaks, the agricultural sector could also be offered additional outlay and maybe even loan waivers.

    Finance Minister, Arun Jaitley might project the fiscal deficit at 3.4 per of GDP for 2018-19. Increasingly, the increased outlay maybe towards the agricultural sector and also towards the infrastructure sector. These are the two areas that need a serious push. The infra sector largely to create jobs which is a desperate need of the hour.

    On the other hand the government cannot ignore the farm sector, where there has been some distress lately. This may push the fiscal deficit a little higher. The fiscal deficit is a number that is eagerly watched by economists, stock markets investors and sovereign rating agencies. The ordinary man is least concerned with this figure, though for the nation and the economy fiscal prudence is a must.

    It is going to be a difficult time for the government to balance the fiscal deficit, at a time when GST revenues are all but certain. One will have to wait and watch and shifting the goal post slightly, to gain economic momentum may not be a bad idea.

    Story first published: Monday, January 29, 2018, 11:06 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'
    India's LARGEST EVER political poll. Have you participated yet?

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more