Motilal Oswal
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Motilal Oswal

Union Budget 2019: Experts expect fiscal deficit to be pegged at 3.6% for FY20

Updated : June 27, 2019 01:17 PM IST

Ahead of the Union Budget 2019, which is to be presented on July 5, experts CNBC-TV18 spoke to said that they expect the fiscal deficit to be pegged at 3.6 percent for the financial year 2020.

“I think the government is going to say that gross domestic product (GDP) growth is under pressure. As a result of which they will rationalise tax revenue forecast for FY20. On the expenditure side, overall expenditure growth will only increase marginally. Combination of these forces could mean that full-year Budget for FY20 is pegged at 3.5 percent which compares to the 3.4 percent that we got at the interim Budget and then I expect 3.5 percent to end up slipping to 3.6 percent mainly because I expect the slowdown to be meaningful,” said Ritika Manker, economist at Ambit Capital.

According to Upasna Bhardwaj, senior economist at Kotak Mahindra Bank, most likely the focus of the Budget would be three parameters. “One is trying to boost consumptions. The second side should be investment wherein the housing and the overall other infrastructure focus should continue... third aspect would be exports,” she said.

“The fiscal math looks difficult at this time. 3.4 percent number that has been announced in the February Budget looks very difficult... there could be a significant shortfall in the tax collection in FY20,” Bhardwaj said.

“There is a high probability of a slippage. Whether it happens by the end of the year or whether the announcement happens upfront is yet to be seen. We are also going with the 3.6 percent for FY20 as a fiscal deficit,” she added.
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