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A gap of 5.8 per cent in the next fiscal, given a possible reduction in subsidies, even as nominal GDP growth is likely to fall by a third to 10.5 per cent, it added.
As per the report, given the overall domestic and global slowdown, the government may miss the medium-term fiscal roadmap of reducing the fiscal deficit to 4.5 per cent by FY2016.
The country is bound for the next hustings in mid-2024, which will have an impact on the budget, the report said, adding that the government is expected to support growth by boosting welfare spending within fiscal limits, which The macro will also help manage consistency. risk amid growing global uncertainty.
Bringing down the fiscal deficit to 4.5 per cent of GDP by FY26 looks ambitious, UBS India economist Tanvi Gupta-Jain said in a note on Wednesday.
Meanwhile, India Ratings & Research said it is expected to continue with social sector spending in the FY24 budget.
The agency said the Finance Minister’s last budget of this government will focus on making consumption demand resilient, boosting infrastructure and manufacturing capital expenditure, increasing skill development and productivity, fiscal consolidation and climate change.
It added that the recently announced measure on the front of free foodgrains 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.
With the spending power of the lower or middle income groups significantly reduced due to high inflation and negligible or negative real wage growth over the past few years, the FY24 budget will bring some relief on the income tax front. It can go a long way in alleviating their pain and give the much needed boost to consumption demand.
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