The Union Budget
for FY19 has made a host of new announcements and increased the allocation for numerous existing schemes, intended to boost the ease of living as well as the ease of doing business.
The Government of India spelt out its clear commitment towards augmenting infrastructure, farmer incomes and the social security net, all of which would aid in improving livelihoods and the quality of life.
In particular, the total capital outlay, including gross budgetary support and the internal extra-budgetary resources of various ministries, is estimated to grow by a healthy 20.5 per cent in the current financial year or FY18 (Revised Estimates or RE), followed by a muted 3.8 per cent rise in FY19 (Budget
Estimates or BE).
Nevertheless, we expect the expenditure proposed by the Budget
to help augment the economic growth momentum over the coming year.
The introduction of the goods and services tax (GST) has contributed to some amount of disruption to the government’s revenues.
We estimate that excluding the GST compensation cess, the pace of growth of the gross tax revenues of the government stood at 9.8 per cent in FY18 RE, which is forecast to ramp up to a robust 15.7 per cent in FY19 BE.
Naresh takkar, MD, ICRA
This, in conjunction with a turnaround in non-tax revenues, would help the government pare its fiscal deficit-to-GDP ratio to 3.3 per cent in FY19 BE from 3.5 per cent in FY18 RE.