Expect subsidies at 1.5% of GDP in FY17: BoAML

Indranil Sengupta of Bank of America Merrill Lynch says he expects Budget 2016 to target FY17 fiscal deficit at 3.8 percent of GDP as it walks a tightrope between supporting growth and trying to maintain fiscal credibility.

According to him, gross tax revenue is expected to grow at 14.2 percent, marginally higher than this fiscal's 12.7 percent as he builds in a shallow recovery to 6.3 percent GDP growth in FY17 from 5.5 percent this year.

At the same time, Sengupta expects subsidies to continue to come off to 1.5 percent of GDP in FY17 from 1.7 percent earlier on account of falling oil.