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gap at 5.8 per cent next fiscal, given the likely reduction in subsidies, even though nominal GDP growth is likely to fall by a third to 10.5 per cent, it added.
The government is likely to miss the medium-term fiscal roadmap of bringing down the fiscal deficit to 4.5 per cent by FY26, given the overall domestic and global slowdown, as per the report.
The nation is bound for hustings mid-next 2024, which will have its sway on the budget, the report said, adding the government is expected to support growth by boosting welfare spending, albeit within fiscal boundaries, which will also help it manage macro stability risks amid the rising global uncertainty.
Bringing down the fiscal deficit to 4.5 per cent of GDP by FY26 looks ambitious, UBS India economist Tanvee Gupta-Jain said in a note on Wednesday.
Meanwhile, India Ratings and Research said that the FY24 budget is expected to continue with social sector spending.
Finance Minister will focus on making consumption demand resilient, boosting infrastructure and manufacturing capex, skill development and increasing productivity, fiscal consolidation and climate change in the last budget of this government, the agency said.
It added that the recently announced measure on the free food grains front under the National Food Security Act for 813.5 million poor from January 01, 2023 to December 31, 2023 is a step in the same direction.
Spending power of the lower- or middle-income class has been ‘eroded significantly’ due to higher inflation and negligible or negative real wage growth over the past few years, it said, adding some relief on the income tax front in the FY24 budget will go a long way in alleviating their pain and can provide the much-needed thrust to the consumption demand.
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