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The focus of the Union Budget 2022 is likely to be on investment-driven growth with a focus on infrastructure investment to generate multiplier effects to spur economic growth.
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New Delhi: The focus of the Union Budget 2022 is likely to be on investment-driven growth with a focus on infrastructure investment to generate multiplier effects to spur economic growth.
Morgan Stanley said in a report, the focus will be on raising additional resources through strategic divestment and asset monetisation. Indeed, the overall focus of the government should be to utilise all revenue levers effectively (tax compliance to improve tax to GDP, strategic asset sales) to sustainably improve the health of the public sector balance sheet.
Fiscal data on a tracking basis has surprised positively, even as spending is tracking above budgeted levels due to the better-than- expected trend in tax collections. However, divestments have remained weak, and, as such, the eventual timing of the LIC IPO can have a bearing on the final fiscal deficit for F2022.
If the IPO goes through in Q4FY22, as asserted by government officials, we opine the fiscal deficit would come in lower by 40bps (at 6.4 per cent of GDP) than the budgeted estimate at 6.8 per cent of GDP. If the IPO fails to materialise, we anticipate the fiscal deficit target would be in line with the government target of 6.8 per cent of GDP.
