Fiscal deficit at 5% of GDP for FY25, nominal growth at 11%: MC Economists Poll

Fiscal deficit to be lower say economists

The government is likely to record a lower fiscal deficit and a higher growth than what was estimated in the Interim Budget, as it retains its focus on fiscal prudence, economists said in a poll conducted by Moneycontrol.

The median forecast of 16 economists pegged the fiscal deficit at 5 percent of the GDP, 10 basis points lower than the 5.1 percent target set in the Interim Budget. None of the economists polled by Moneycontrol expects a slippage on the fiscal front.

On the other hand, the economists noted that the output is likely to get a boost with the government projecting an 11 percent nominal growth, compared with 10.5 percent projected in the Interim Budget.

IDFC First Bank and ANZ pegged the growth at 11.5 percent, higher than other forecasts in the poll.

India saw a spate of forecast revisions on the growth front, following a better-than-expected 8.2 percent growth in FY25 and hopes of recovery in private investment and consumption.

The IMF on July 16 revised its FY25 growth forecast for real GDP to 7 percent from 6.8 percent projected in April.

Capital spending is expected to remain unchanged from the interim budget at Rs 11.11 lakh crore. The forecasts ranged from Rs 11 lakh crore to Rs 12 lakh crore.

Push for rural

The economists were unanimous in predicting that the budget will provide a push for the rural economy, muted consumption and jobless growth were the most cited concerns for the economy.

Among the schemes that could push growth, the economists cited the Pradhan Mantri Awas Yojana as a primary driver.

Sujan Hajra, chief economist, Anand Rathi Shares and Stock Brokers, cited production-linked incentive schemes and PMAY as schemes that could have a major impact.

Rajani Sinha, chief economist at CareEdge, was upbeat on Skill India and PLI as major impact initiators, while Aditi Nayar, chief economist at Icra, said that the scheme for special assistance to states for capital expenditure could have a major impact.

Over two-thirds of the economists did cite increased rural allocations, PMAY as one of the three social interventions expected in the budget, with 64 percent batting for rural development or increased rural allocation and 50 percent citing PMAY.

Moreover, 90 percent noted that there was a case for expansion for rural employment scheme, the Mahatma Gandhi Rural Employment Guarantee Scheme, Krishi Kalyan and Ayushman Bharat programme.

A higher nominal growth and more-than-expected dividend from the Reserve Bank of India to the tune of Rs 1.3 lakh crore is expected to provide space for the government to expand coverage of schemes.

Shift in focus

The focus is also likely to shift away from 2047, as only 60 percent of the economists were sure that the government will lay a roadmap for 2047 in the upcoming budget.

“Provisions for adequate capital to support National Infrastructure Pipeline and PM Gatishakti programmes should be the primary priority area for Vision 2047,” said Debopam Chaudhuri of Piramal Enterprises Ltd.