Budget 2022 Expectations - Government Likely To Target FY23 Fiscal Deficit At Rs 15.2 Trillion: ICRA
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ICRA Research Report
We expect the Government of India’s gross tax receipts to surpass the budgeted amount by a healthy Rs 2.5 trillion in FY22. However, the net tax revenue gains to the GoI would be nullified by the expected large miss on receipts from disinvestment and backended spending.
Consequently, we expect the GoI’s fiscal deficit to print at Rs 16.6 trillion (or 7.1% of gross domestic product) in FY2022, exceeding the budgeted amount of Rs 15.1 trillion (or 6.8% of GDP). We project the aggregate fiscal deficit of all state governments at ~3.3% of GDP in FY22, indicating a General Government fiscal deficit of 10.4% of GDP.
The Union Budget for FY23 will face some constraints owing to an expected slowdown in indirect taxes growth following the excise duty relief provided recently and the moderation in nominal GDP growth to ~12.5% from ~17.5% expected in FY2022.
Besides, uncertainty arising from new mutations and fresh waves of Covid-19, may necessitate additional spending by the way of extension of free foodgrains scheme for a period of six months and higher spending on the Mahatma Gandhi National Rural Employment Guarantee Act.
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