The Indian Government is expected to continue with fiscal consolidation and deliver a ‘popular, but not a populist’ budget with a fiscal deficit target of 3 per cent in 2017-18, says a report. According to Japanese financial services major Nomura, a populist budget is not likely, though there are concerns that the Government may be tempted to provide such measures amid derailment of growth momentum post demonetisation.
“While the theme of demonetisation will inevitably be present in the budget, we expect a popular and prudent plan, not a populist one, with the Government sticking to its fiscal consolidation targets, aided by higher revenue collections,” Nomura said. It further said the budget is expected to aim at corporate tax rationalisation, promoting ‘less cash’ economy and higher spending on rural sector, affordable housing and public infrastructure. Government is scheduled to present the Union Budget 2017-18 on February 1. Nomura expects the fiscal deficit target of 3.5 per cent for 2016-17 to be met and to be consolidated further to 3 per cent of GDP in 2017-18.