Fiscal Analysis - Karan Mehrishi, Lead Economist at Acuité Ratings & Research Limited

"The budgetary projections for FY 2020-21, given the prevailing economic circumstances in India, has been significantly moderated. Consequently, the revenue receipts are expected to grow at just over 9.0% as compared to 19.2% estimated for the previous year. While tax revenue will increase by 8.7% (as compared to 14.2% projected in FY20), the non-tax revenue will grow by only 11.4% (as compared to 46.6% in FY20 where there was a special dividend by RBI). Deficit financing too, will grow by just over 3.8% as compared to over 18% expansion seen in the previous year with the fiscal deficit limited to the 3.5% level. This also reflects a rationalization in revenue expenditure; however, capital expenditure is expected to expand by 18% (Rs. 64,000 Cr) for FY21, as a result of the massive commitment towards the National Infrastructure Plan (NIP). This will translate to incremental debt issuances, because of which interest payment obligations will be going up by Rs. 83,000 crores, despite an accommodative monetary policy. Overall, the budget's focus can be summarized as a pro-investment, which the economic survey identifies as a key to the revival of household consumption."

Source : Equity Bulls

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