State bank of India (SBI) research has suggested that India’s budget deficit target could narrow to 6.3% of gross domestic product (GDP) in the next financial year.
SBI economist Soumya Kanti Ghosh has noted, assuming that the government keeps the expenditure growth at 8% over FY22 estimates at Rs 38 lakh crore in FY23 and receipts would grow by around 10.8%, it would lead to fiscal deficit of around Rs 16.5 lakh crore or 6.3% of GDP in FY23.
“The main objective of the budget should be to create an environment that will give further impetus to growth,” by giving higher weightage to a short-term stabilisation policy rather than long term policy, the report further added.
Further, Ghosh cautions that any new taxes like wealth tax or others at this point could do more harm than benefit. As the country battles another wave of the Covid-19 pandemic, the government should consider exempting health insurance products from GST, at least for all retail and health focused products, it says.
The note also calls for rationalising existing taxation structure on contractual savings. “Under 80TTB, the threshold limit on interest income from deposits by senior citizen may be increased to Rs 1,00,000, which will have fiscal cost of only Rs 2,000 crore.”