Mumbai: Rating agency Moody’s said in a note that the Union Budget does not have any concrete measures to boost revenue generation, even though capital expenditure plans have increased substantially and fiscal deficit estimates suggest that the government is taking strong measures to help with fiscal consolidation. Relying heavily on development. ,
It said the budget underscores the government’s past emphasis on capital spending for near-term recovery from the pandemic, as well as paving the way for a long-term restructuring of the economy.
But the various spending initiatives are not offset by any significant announcement relating to further growth in revenue generation; Instead, the announced revenue-related measures are aimed at other objectives such as promoting start-up innovation, ensuring more equitable treatment for cooperatives and state employees, and promoting tax compliance through simplification, said a senior vice president, Sovereign Risk Christian de Guzman Group, Moody’s Investors Service, said.
On the fiscal consolidation front, he said the target of limiting the central deficit to 6.4 per cent in FY12 from 6.9 per cent in FY12 shows that the government is trying to help drive fiscal consolidation in light of the big jump in capital expenditure. Relying on strong growth for which is up to 35 per cent for the next financial year and has created some uncertainty given the enormity of the risks related to the pandemic.
The higher-than-expected deficit in the current fiscal partly reflects higher spending on the back of the second wave as well as a larger subsidy bill that was driven by higher food and commodity prices.
On a general government basis, states’ finances also continue to face challenges to fiscal consolidation, with states having higher expenditures through higher allocations for capital expenditure and allowing 4 percent of GSDP as fiscal deficit. .
However, he added that the budget further strengthens New Delhi’s announced commitment to achieve net-zero carbon emissions by 2070.
The focus on climate initiatives in the budget signals the government’s broad commitment towards achieving net-zero carbon emissions by 2070. Measures such as using Sovereign Green Bonds to boost solar power generation and significantly increasing subsidies are a good start, he said.
(This story has been published as part of an auto-generated Syndicate wire feed. Other than the title, no edits have been made to the copy by ABP Live.)
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