New Delhi, Global brokerage firm Morgan Stanley expects Finance Minister Nirmala Sitharaman's upcoming budget to focus on the government's roadmap for 'Viksit Bharat' by 2047 and detail the medium-term plan for consolidation fiscal.
"As fiscal prudence guides the overall fiscal policy stance, we expect the focus to remain on capital spending above revenue spending and on social sector-specific spending, with a focus on improving access to physical infrastructure , social and digital," Morgan Stanley's research report said Wednesday. .
Sitharaman is scheduled to present the full budget for the fiscal year 2024-25 on July 23, which will be the first major policy document of the new government.
The brokerage firm expects the central government's fiscal deficit target to remain at 5.1 per cent of GDP in 2024-25, in line with the interim budget (up from 5.6 per cent of GDP in 2023-24 ) and is on track to achieve the goal. of 4.5 percent of GDP for the next financial year.
"Fiscal space has improved with a larger-than-expected RBI surplus carryover, which, in our view, will help maintain the capital expenditure momentum and increase target social spending. In this context, we see the possibility of a slightly lower fiscal deficit target (slightly below 5.1 percent of GDP), given support from tax and non-tax revenues," he said.
She also hopes that the budget will focus on the government's roadmap for 'Viksit Bharat' (developed nation) by 2047.
Additionally, the budget could also provide a roadmap for a medium-term plan for fiscal consolidation beyond 2025-26, she added.
The report says the budget's impact on the stock market has been in secular decline, although actual performance is a function of pre-budget expectations (as measured by market performance before the budget).
For now, the market appears to be approaching the Budget with exuberance and could be grappling with both volatility and a post-Budget correction, if history is any guide, he said.
"As fiscal prudence guides the overall fiscal policy stance, we expect the focus to remain on capital spending above revenue spending and on social sector-specific spending, with a focus on improving access to physical infrastructure , social and digital," Morgan Stanley's research report said Wednesday. .
Sitharaman is scheduled to present the full budget for the fiscal year 2024-25 on July 23, which will be the first major policy document of the new government.
The brokerage firm expects the central government's fiscal deficit target to remain at 5.1 per cent of GDP in 2024-25, in line with the interim budget (up from 5.6 per cent of GDP in 2023-24 ) and is on track to achieve the goal. of 4.5 percent of GDP for the next financial year.
"Fiscal space has improved with a larger-than-expected RBI surplus carryover, which, in our view, will help maintain the capital expenditure momentum and increase target social spending. In this context, we see the possibility of a slightly lower fiscal deficit target (slightly below 5.1 percent of GDP), given support from tax and non-tax revenues," he said.
She also hopes that the budget will focus on the government's roadmap for 'Viksit Bharat' (developed nation) by 2047.
Additionally, the budget could also provide a roadmap for a medium-term plan for fiscal consolidation beyond 2025-26, she added.
The report says the budget's impact on the stock market has been in secular decline, although actual performance is a function of pre-budget expectations (as measured by market performance before the budget).
For now, the market appears to be approaching the Budget with exuberance and could be grappling with both volatility and a post-Budget correction, if history is any guide, he said.
