Fiscal deficit likely to be higher than the estimated 3.2% of GDP in FY18 on lower growth and reducing the same will be a challenge in FY19, unless we see a an increase in GDP growth.
• Expect to see a roadmap for reduction in corporate tax rates and personal income tax for lower income brackets benefitting the middle class.
• Farm loan waiver/subvention a possibility as a boost to affected areas in rural India and sops for agriculture, be it in terms of supporting increased mechanisation or sops to improve farm income.
• With the private capex still remaining low, government may resort to increased market borrowings going forward to fund government capex, the budget will continue to focus more on public sector/government capex.
• Hence, we expect to see slightly loose fiscal policy and the government may not adhere to the earlier targeted tight fiscal levels to aid growth in an election year .
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• With elections in mind, the key theme of this budget could remain as a balancing act between improving growth managing the set fiscal targets and lower tax rates especially for the lower segments and rural benefits with sops to the masses
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