Budget 2018 goals to range from deficit reduction to lifting capex

BUDGET 2018 - India’s Finance Minister Arun Jaitley is likely to deliver mostly good news on fiscal consolidation when he unveils next year’s budget on Feb. 1. The government is set to overshoot its deficit target in the current year through March, largely due to lower dividend payments from the central bank. The proposed budget for fiscal 2019 though, will look better -- for deficit reduction and investment plans.

The consensus view is that Jaitley has to choose between two competing goals: either purse its aim to cut the deficit to 3% of GDP, or boost investment needed to spur growth and reduce bottlenecks in the economy -- not both. Bloomberg Economics’ view is that the trade-off isn’t so stark. Sales of government-owned assets and increased revenue from goods and services tax reform mean Jaitley should be able to net sufficient revenue to meet both objectives.

READ MORE