Key expectations: Government may miss targets on budget gap

After scoring a rare sovereign upgrade late last year, Modi wants to keep global investors and credit-rating companies on his side. Key to that will be sticking his goal to narrow one of Asia’s largest budget deficits. In the last full budget before the elections, Finance Minister Arun Jaitley needs a growth boost for an economy that’s slowing down to a four-year low, while appeasing angry young voters, who contributed to the ruling party’s worst performance in Modi’s home state in more than two decades in December.

Bond investors have already concluded that Jaitley will deviate from those plans when he delivers his budget on Thursday, with yields climbing 96 basis points in the past six months, the most in Asia.

HSBC expects India to miss its fiscal deficit target of 3.2 percent of gross domestic product for the year to March 2018, with the shortfall probably coming in at 3.4 percent amid slower growth, the chaotic implementation of the consumption tax that hit revenues, and a lower dividend from the central bank.

ICRA Ltd., the local arm of Moody Investors Service, estimates that a 10 basis-point expansion in the fiscal deficit-to-GDP ratio allows for extra spending of 185 billion rupees ($2.9 billion).

“Government spending on the rural sector spirals up ahead of any election as the voter base lies in the rural and urban poor areas,” according to Reshmi Khurana, the head of South Asia investigations and disputes at Kroll, a risk consultancy firm.

I hope the Finance Minister will present a budget that will help small families like mine. I will be happy if the income tax exemption limit is raised and the percentage of tax is reduced. Daily essentials like vegetables, fruits and household items have become very expensive since demonetisation and GST. With the raise in movie ticket prices, it has become difficult to even plan a monthly film outing to the multiplex – we have to give in to our children’s requests sometimes. Recently, the bus fares have been raised, which also puts a dent in our plans. We can’t compromise on their college fees, as their education is priority and obviously we desire for them to study in a quality institute.

I would like the Government to address this price rise as it is hard to manage a household with our income. The increasing rise in price of petrol must be curbed; it has raised our travel expense exponentially. Some relief on savings such as gold would also be good for households. School and college fees have also been hiked and that is causing a pinch in our pockets. The middle class have really suffered over the last year and I hope there is some positive news for us in this budget.” — Parimala Sundari C, Homemaker

With the finance minister presenting Union Budger-2018 on Thursday, expectations are running high among the traders, whether such budget will serve any purpose. Small traders expect more benefits like providing loans particularly for small traders and incentives to improve their livelihood.

Since the government has implemented online system for money transactions, traders, who are mostly illiterate, suffer, as they cannot do such thing. So, we expect the insistence on online transaction should be relaxed for traders. They also expect that price of petrol and diesel should be reduced so that price of vegetables can be normalised, he added.

Even the Koyambedu market and other fish markets has more number of small vendors and the government should provide loans to these vendors for less interest. Besides, several women who are heads of families like widows are also engaged in small trade business. 

They should also be provided subsidy to purchase vegetables and other necessary items. So, the government should also construct separate markets for widows free of cost. — VR Soundararajan, Member, Koyambedu Market Management Committee