GROSS FISCAL DEFICIT
Budget Preview: Govt could use part of RBI dividend to reduce fiscal deficit, says Motilal Oswal
A transfer of Rs 2.11 lakh crore by the RBI implies excess receipts of about Rs 1.5 lakh crore in FY25, the MOFSL note said. MOFSL sees the new government largely retaining its tax and non-debt capital receipt (including disinvestment) projections as presented during the interim Budget in February.
Subsidy allocation likely to stay at Interim Budget mark of Rs 4.1 lakh crore
The Centre aims to reduce the fiscal deficit to 5.1% of GDP, with allocations for food and fertiliser subsidies slightly lower than previous estimates. Plans include reducing dependency on imports for better fertiliser subsidy management.
Weaker BJP in power won't increase borrowing in July budget, says Kotak Mahindra Bank
Budget 2024: A weaker majority for Prime Minister Narendra Modi's alliance may lead to increased welfare spending without the need for additional borrowing, potentially limiting a rise in bond yields, according to a senior executive at Kotak Mahindra Bank . The government is expected to utilize a large dividend from the Reserve Bank of India for welfare schemes, rather than increasing gross borrowing in the upcoming budget. Despite concerns of populist measures, the executive rules out a supply cut in bonds and forecasts the 10-year benchmark yield to remain below 7.10% over the next six months.
A weaker Modi government will slow India's fiscal tightening, Moody's says
Indian PM Modi's narrower election victory limits aggressive fiscal reforms, per Moody's analyst Christian de Guzman. BJP secured 240 seats, with NDA totaling 293. Despite this, fiscal consolidation will persist, but populist spending risks increase. India's fiscal deficit target is 4.5% by 2025/26. Bond yields surged post-election, and Moody's sees stable economic prospects.
Modi govt's fiscal consolidation pace post-Covid worse than peers? Moody's report flags weaker fiscal, debt metrics
Moody's rating agency has pointed out that India's fiscal consolidation following the Covid-19 pandemic has lagged behind when compared to its peers. This includes several emerging markets in the Asia-Pacific region.
Strong growth, lower fiscal deficit may lead to India rating upgrade: Deutsche Bank
A German brokerage predicts a possible sovereign rating upgrade for India due to strong growth and improved fiscal deficit targets. S&P recently upgraded India's sovereign rating outlook to 'positive'. The real GDP growth for India has been resilient, with a notable increase in FY24.
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Indian bond yields seen lower as exit polls predict government continuity
Indian government bond yields are expected to open lower on Monday after positive exit polls hint at PM Modi's re-election. The 10-year yield may range between 6.94%-7.00%. Expectations of policy continuity and fiscal consolidation are driving investor sentiment.
New govt may cut FY25 fiscal deficit target amid robust growth and windfall RBI dividend
In the interim budget in February, the government had set the FY25 fiscal deficit goal at 5.1% of GDP and revised the FY24 target to 5.8%. However, the actual fiscal gap for FY24 was contained at 5.6%. With exit polls projecting Prime Minister Narendra Modi to retain power with a strong majority, policy continuity is expected, and the government may aim to further improve the fiscal deficit target for the upcoming fiscal year starting April 1, 2025.
View: Whichever way you cut it, the economy’s booming and is a welcome gift for the incoming government
The Indian economy is booming with a GDP growth of 8.2% for 2023-24, surpassing estimates. The National Statistics Office data highlights this growth despite challenges in sectors like manufacturing and agriculture.
At 5.6% of GDP, FY24 fiscal gap beats target
In absolute terms, the FY24 fiscal deficit stood at ?16.54 lakh crore, down from the revised estimate of ?17.35 lakh crore and FY23 level of ?17.38 lakh crore, showed the official data released on Friday. A lower-than-anticipated deficit in FY24 and a generous surplus transfer by RBI earlier this month make the government's goal of reining in fiscal gap at 5.1% of GDP in FY25 seem more realistic now, experts said.
India utilised 99.9% of its capex target in FY24
India has used Rs 9,48,506 crore in its capital expenditure in FY24, up from the revised estimate of Rs 9,49,555 crore. The government plans to narrow its fiscal deficit to 5.1% in FY25 from 5.8% in FY24. Private capex is expected to be an important driver of growth and job creation. India's GDP growth was 7.8% in Q4 of FY24, and the overall growth rate is now estimated to be 8.2%.
India's GDP grows 7.8 per cent in Q4, FY24 growth pegged at 8.2 per cent
India Q4 GDP: The analysts were anticipating a better-than-expected growth for the January to March quarter this time around. The Reserve Bank of India (RBI) estimated Q4FY24 real GDP growth to be 7 per cent while ET Poll suggested the growth rate of 6.8 per cent. As per a Reuters poll, the Indian economy was expected to grow at 6.7 per cent in the January-March quarter on a year-on-year basis, owing to weak demand.
India's fiscal deficit improves to 5.6% of GDP in FY24, lower than target of 5.8%
India's FY24 fiscal deficit hit Rs 16.54 lakh crore, 95.3% of target. Central government's FY24 fiscal deficit stood at at 5.6% GDP, below 5.8% estimate. Tax receipts surpassed at Rs 23.27 trillion, 100.1% target. Expenditure at Rs 44.43 trillion, 99% target. Capital expenditure at Rs 9.49 lakh crore. Fiscal discipline aims for 5.1% deficit in FY25.
S&P Global to observe India's fiscal glidepath for ratings upgrade
S&P Global Ratings will monitor India's fiscal consolidation efforts over the next two years for a potential sovereign ratings upgrade. Despite raising the outlook to "positive," the rating remains "BBB-." Focus is on India's fiscal deficit reduction targets, fiscal discipline with RBI's surplus transfer, and its ability to manage inflation.
S&P Global will likely raise India's rating within 2 years, Citi says
Citi anticipates S&P Global Ratings will upgrade India's sovereign rating by late 2026, following S&P's recent outlook improvement to 'positive' from 'stable'. Citi cites S&P's confidence in India's economic fundamentals and fiscal trajectory. India's fiscal health, aiming to reduce its deficit, is key to the potential upgrade.
Sovereign yield falls to near 1-year low post RBI's dividend payout
The yield on the 10-year benchmark government security closed at 6.978%, its lowest level since June 6, 2023, LSEG data showed. The 10-year bond yield had closed at 6.98% on Friday. Bond prices and yields move inversely.
10-year bond yield falls to near-one-year low on RBI’s record surplus dividend transfer to govt
A fall in government bond yields lowers borrowing costs across the economy as sovereign debt yields are the benchmarks for determining price of corporate borrowing.
RBI's ₹2 lakh-crore boost may help India's new govt have an easy-peasy run to achieve a goal
The RBI on May 22 announced a record-high dividend transfer to the government equivalent to 0.6 per cent of GDP ( Rs 2.1 lakh) from its operations in FY24. The figure has surpassed the 0.3 per cent of GDP expected in the FY25 budget from February. Hence, the rating agency said that it will aid the authorities in meeting near-term deficit reduction goals.
RBI's record dividend presents a delicious dilemma for new Indian government
As India prepares for a new government by June 4, a significant Rs 2.11 lakh crore windfall awaits allocation. Options range from faster deficit reduction to increased spending. Analysts anticipate positive investor sentiment, though preferences vary between deficit reduction and expenditure. The BJP-led government's cautious approach contrasts with opposition promises
Government gets Rs 2.11 lakh crore from RBI by way of dividend
The Reserve Bank of India (RBI) has transferred a record surplus of Rs 2.1 lakh crore to the central government for FY’2023-24, exceeding expectations. This windfall, largely from interest income on overseas securities and income from LAF operations, strengthens the government's fiscal position and may lead to a reduction in borrowing. The surplus, determined by the Economic Capital Framework (ECF), represents 25.5% of RBI's total assets.
OECD revises India's FY25 growth forecast upward to 6.6%
OECD revised India’s FY25 growth forecast to 6.6%, citing strong investment and business confidence. Public sector investment will be crucial, with inflation expected to decrease, leading to rate cuts. Emphasis on fiscal deficit, agricultural reforms, and global growth.
Net direct tax collections surge 17.7% YoY to Rs 19.58L cr in FY24
India's FY 2023-24 net direct tax collections of ₹19.58 lakh crore exceeded estimates, aiding fiscal deficit target achievement. Corporate and personal income tax growth contributed to the positive outcome.
Current Account Deficit expected to reach year's high of 1.2 % of GDP in FY24 third quarter, predicts ratings agency
India Ratings and Research (Ind-Ra) forecasts a current account deficit of USD11 billion in 3QFY24, with expectations for a dip in the deficit in 4QFY24. Ind-Ra projects a rise in merchandise exports and imports, leading to a moderation of the goods trade deficit and an increase in the services trade surplus.
Egypt says land sale, IMF accord will ease budget problems
Egypt agreed in February to sell the development rights to Ras al-Hikma, a prime Mediterranean resort destination, to Abu Dhabi for $24 billion and expects more than $20 billion from an IMF-led package signed last Wednesday. The package includes $3 billion in funding from the World Bank, Maait said.
Govt spent 80% of revised FY24 capex outlay
The official said the collections under various small savings scheme remain healthy this fiscal and will be in sync with the revised estimate. The net mop-up for senior citizens breached ₹90,000 crore as of end-January this fiscal, way above that of ₹37,362 crore in the whole of FY23. The surge is mainly driven by the 2023 Budget move to double the deposit limit under the scheme to₹30 lakh.
Fiscal deficit target of 4.5% of GDP by FY26 a challenge: Fitch
India's government faces challenges in meeting its fiscal deficit target of 4.5% of GDP in FY26, according to global ratings agency Fitch. The agency predicts a 6.5% growth in the Indian economy in FY25, supported by 11% growth in government capex. The government has set a 5.1% fiscal deficit for FY25, down from 5.8% in FY24. Fitch expects the new government to maintain the fiscal path laid down in the interim budget.
India's 10-year bond yield falls most in 15 months on budget boost
Indian government bond yields plummeted this week, with the benchmark yield posting its biggest drop in 15 months, as investors cheered a fiscally-prudent federal budget and as U.S. Treasury yields nosedived.
Fiscal deficit target of 5.1 per cent ambitious but achievable: Finance Secretary
Finance Secretary T V Somanathan believes that the government's target of reducing the fiscal deficit to 5.1% of GDP in 2024-25 is ambitious but achievable. This is based on the assumption of growth in tax revenue of 11.5%, an increase in non-tax revenue, and a nominal GDP growth rate of 10.5%. Somanathan also mentioned the control over avoidable expenditure and a balanced increase in capital expenditure as factors contributing to the target. He dismissed criticisms on capital expenditure, stating that the increase is realistic and necessary for the economy.
Fiscal deficit until Dec at 55% of annual target
India's fiscal deficit for the first three quarters of the fiscal year reached 55% of the annual target, down from 58.9% the previous year. The fiscal gap until December 2023 stood at ₹9.82 lakh crore, compared to ₹9.92 lakh crore a year earlier. The government maintained control over revenue spending, which eased for the fourth consecutive month in December. Capital spending, however, increased by 37.5% to ₹6.74 lakh crore until December, representing 67.3% of the annual target. The fiscal gap in December alone widened to ₹75,694 crore, more than five times the November level.
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