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Budget 2019: Economists say big sized farm package to impact revenue side of central & state governments

Updated : February 01, 2019 09:40 AM IST

Leading economists on Friday said any big sized farm package in the 2019 interim budget will impact the revenue side of central and state government’s budget.

"If government announces large farm package of around Rs 2 lakh crore and if it's implemented in this fiscal, then it would stretch the revenue side of the budget, not just for the central government but for the state government as well," Jahangir Aziz, head of emerging market economics at JPMorgan, said to CNBC-TV18.

"It will push the borrowing, whichever way accounting changes. Food Corporation of India will start borrowing again,” Aziz said, "So investors should look at overall size of public sector borrowing as that will affect the bond yields and tell us how much resources are left with the private sector."

According to Sonal Varma, managing director and chief India economist at Nomura, "In terms of the headline expectations, Rs 2 lakh crore, which is about one percent of gross domestic product (GDP) would much higher than expected. The headline message that would go out to investors is that the government is prioritising populism over fiscal prudence."

Further she said, "One will also need to consider if the package is for one-time or recurring one as the one-time impact won’t be as much as if it is a recurring one."
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