- 2 Feb 2021
- Post Views: 3720
Download DMI Finance App! Click here
The FY22 budget prioritized reviving economic growth over fiscal prudence in line with our expectations. An ambitious expenditure target for FY22 entails a significant jump in capital spending, marking a shift towards more productive spending. The government refrained from any major tax changes, except custom duty hike and an agriculture cess, instead focused on non-tax revenues through a renewed push to divestment programme and asset monetization. While conservative revenues assumptions leave the possibility of a positive surprise, the government presently projects high deficits in FY21 and FY22. Resultant sizeable market borrowing would need RBI’s continued support into next year. Intending to attract capital to fund the ambitious infrastructure investment plan, the government proposed setting up a Development Bank, strengthening the financial system by setting up ARCs/AMCs and recapitalizing PSBs, furthering capital market reforms, and increasing the FDI limit for insurance. Execution of an ambitious investment plan and success of related enabling measures is critical to lift economic growth and ensure debt sustainability. Key disappointment in the budget was the absence of steps for the stressed sectors which are still witnessing a laggard recovery.
Any statement expressed as recommendation in this Report is general in nature and should be construed strictly as current opinion of DMI as of the date of the Report and may be subject to change from time to time without prior intimation or notice. The readers of this Report should carefully read, understand and investigate or enquire (either with or without professional advisors) into the risks arising out of or attached to taking any decisions based on the information or opinions contained in this Report. DMI or its officers, directors, personnel and employees, including persons involved in the preparation or issuance of this Report may have potential conflict of interest with respect to any recommendation and related information and opinions.
Neither DMI nor any of its officers, directors, personnel and employees shall be liable for any loss, claim, damage of whatsoever any nature, including but not limited to, direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this Report or the information therein or reliance of opinions contained in this Report, in any manner.
No part of this Report may be duplicated or copied in whole or in part in any form and or redistributed without the prior written consent of DMI. Any reproduction, adaptation, distribution or dissemination of the information available in this Report for commercial purpose or use is strictly prohibited unless prior written authorisation is obtained from DMI. The Report has been prepared in India and the Report shall be subject only to Indian laws. Any foreign reader(s) or foreign recipient(s) of this Report are requested to kindly take note of this fact. Any disputes relating to the Report shall be subject to jurisdiction of Republic of India only.
Read less