Rating agency ICRA estimates the Government’s revenue receipts to witness an upward revision of Rs. 1.2 trillion in the upcoming union budget.
Also, the government is likely to peg a relatively shallower increase in the revenue expenditure (revex) target, largely focused on the rural economy, the agency said in a release.
“The GoI is likely to set a fiscal deficit target at 4.9-5.0% for FY2025, vis-à-vis the IBE of 5.1% of GDP, without compromising the capital expenditure target of Rs. 11.1 trillion,” the agency said in a note.
Consequently, ICRA believes that there is a high likelihood of reducing the net market borrowings for FY2025 by Rs. 350-550 billion vis-à-vis the IBE of Rs. 11.8 trillion, which would augur well for yields, along with the demand boost for Government securities (G-secs) owing to their inclusion in the J.P. Morgan Government Bond Index.
ICRA’s analysis suggests that incremental fiscal consolidation will be challenging over the next 3-4 years. Moreover, the extent of off-budget capex ‘on-budgeted’ during FY2022-24 must be considered while assessing the end-point of the fresh medium-term fiscal glide path beyond FY2026.”