Budget 2022 likely to boost spending with near-record debt, hold tax rates
India, which is set to regain the world’s fastest-growing major economy title, will likely prioritize growth over fiscal consolidation by boosting spending, according to economists surveyed ahead of Tuesday’s presentation of the nation’s federal budget. Finance Minister Nirmala Sitharaman will probably increase the budget by about 14% year-on-year to 39.6 trillion rupees ($527 billion) in the fiscal
year beginning April, according to the median of estimates compiled by Bloomberg. She is expected to leave tax rates largely unchanged, and instead rely on income from asset sales and a near-record borrowing of about 13 trillion rupees to partly fund the plan, the survey showed.
Elevated expenditure will, for yet another year, keep the government’s budget deficit wider than 6% of gross domestic product. Economists predict Sitharaman will target a fiscal gap of 6.1% of GDP next fiscal year after ending the current year with a 6.8% shortfall, thanks to looser spending to see the economy through the pandemic. “The recovery from the pandemic has been swift but incomplete,” Dhiraj Nim and Sanjay Mathur, economists at Australia & New Zealand Banking Group Ltd. wrote in a report. “A fine balancing act between fiscal retreat and economic recovery is thus needed.” With curbs to stem the omicron variant of Covid-19 fanning unemployment and inequalities, Sitharaman will be under pressure to step up spending on everything from infrastructure projects to health care in a bid to create jobs and pull people out of poverty. Oxfam is recommending the government
impose a 1% surcharge on the richest 10% of the population to invest in health and education…Read More