The government is likely to continue on its path to fiscal consolidation in the upcoming Union Budget 2022-23 despite lower realisations from the privatisation of state-run companies.
The government will continue to balance its fiscal goals and spending requirements aided by strong revenues from direct and indirect taxes for the year ahead.
The government is likely to stick to its path of fiscal discipline despite calls for relaxing fiscal targets in order to boost spending to aid the economic recovery, according to a report in Times of India.
The Centre maintained strict spending despite increasing pressure from economists and corporate sector during the first phase of the Covid-19 pandemic.
However, increased spending on areas of healthcare, rural employment along with a focus on capital expenditure in infrastructure will continue given the need to boost economic activity.
Many within the government are of the view that increased capital expenditure will boost demands in crucial sectors such as steel and cement ad will lead to higher investments in the coming quarters as excess capacity is utilised.
Finance Minister Nirmala Sitharaman is expected to increase funds for sectors facing a cash crunch. The Finance Ministry is expected to allocate more funds for highways for the coming year.
In the election year, the government will also be mindful of showing that taxpayer money is actually utilised for developmental activities rather than being used for just interest payments. The government has budgeted for tax revenues of Rs 22 lakh crore and interest payments of Rs 8 lakh crore.
FM Sitharaman will present the Budget 2022 on February 1. Budget 2021 had pegged the fiscal deficit at 6.8 per cent or Rs 12.05 lakh crore for FY22, down from 9.5 per cent in FY21 when also it had borrowed Rs 12 lakh crore but in percentage terms it soared given the massive 7.3 per cent contraction of the economy in the year.
The FY21 deficit jumped after the government in May 2020 raised its gross market borrowing target for the fiscal to Rs 12 lakh crore from Rs 7.8 lakh crore budgeted in February 2020 after the pandemic scuppered all the budgetary numbers
