Ajay Garg, Managing Director at Equirus and Anitha Rangan, Economist at Equirus
India Budget 2022 is perhaps one of the most anticipated budgets of the decade, coming after two years of pandemic disruption. This budget will likely put the interruption behind and focus on growth. What can we expect here?
First, there will be no hurry to bring down the fiscal deficit sharply. We expect the fiscal deficit to GDP ratio to come down gradually, with the emphasis on quality spending, especially towards capital expenditure. This year could come within budget expectations, while next year will come around 5.7 percent. Glide path will be a gradual reduction of 50 -75 bp each year.
Next, on the revenue side, expect tax buoyancy to continue. One can expect mid double-digit growth on tax revenues. On the non-tax side, while one cannot expect any surge in dividends or spectrum collections, the much-anticipated divestment program will kick start this year. In the recent past, large disinvestment proceeds were driven by PSU entities buying the assets or ETF (exchange traded funds) sales while actual IPOs in the PSU space have been few. LIC IPO will be a gamechanger which should pave the way for future divestments and asset monetization to provide much needed capital to spend.