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<keyword id="20207838" type="General" weightage="20" keywordseo="dsp-mutual-fund" source="keywords">DSP Mutual Fund</keyword>'s September 2024 Netra report credits <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s strong economic recovery to increased fiscal expenditure. The report, which tracks current economic trends and market insights through various charts, emphasizes the need for the private corporate sector and households to play a larger role in sustaining the ongoing growth momentum. Netra also pointed out an unsettling calm in the markets, with the Nifty 50 TRI index maintaining an impressive 53-month streak without a 5% decline and 13 years without a drop greater than 10%. Sahil Kapoor, Head of Products and Market Strategist, DSP Mutual Fund, said, "The calm in the markets, marked by an unnerving lack of volatility, is a double-edged sword. While it provides a sense of stability, it also masks underlying risks that could surface unexpectedly, catching investors off guard. To ensure a sustainable recovery, there is a need for the private sector and households to take the lead, transforming fiscal stimulus into lasting economic growth." However, the report notes a shift in market dynamics, with the momentum factor, which has outperformed since the COVID-19 bottom, beginning to lose its dominance. At the same time, the quality factor, which had underperformed over the last four years, is now seeing a resurgence, potentially indicating a change in market leadership that could favour quality-orientated funds, both active and passive. The report highlights the critical role government spending has played in the recovery, with a focus on capital investments crucial for future growth. However, contributions from the private corporate sector and households have lagged. It also draws attention to a slowdown in India's per capita consumption, approaching lows seen in previous cycles. Given that consumption accounts for around 60% of GDP, it is vital that this sector grows at a rate exceeding GDP growth to stimulate private capital expenditure. India's <keyword id="487578" type="General" weightage="20" keywordseo="tax-collections" source="Orion">tax collections</keyword> have demonstrated robust growth, with gross tax revenue showing a five-year compound annual growth rate (CAGR) of 14 %. This growth, largely driven by <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword>, indicates a rising dependency on capital gains and stock market performance, introducing new vulnerabilities to the economy. The banking and financial services sector (<keyword id="19910880" type="General" weightage="20" keywordseo="bfsi" source="keywords">BFSI</keyword>) has emerged as a key driver of market earnings, recording a 12 % increase in profit after tax (PAT) growth, significantly outpacing the 4.6 % growth observed in non-BFSI Nifty 50 companies. This disparity underscores the sector's importance in India's economic story and highlights promising investment opportunities.

India's strong economic recovery is led by fiscal expenditure: DSP MF

<ul class="summary-list"><li>There isn't a fiscal bazooka that can be aimed at all of China's economic issues, a Citi strategist says.</li><li>The idea that China's government will be able to steer the economy towards prosperity is an assumption that needs to be revised.</li></ul>China's economic situation is far too anemic for a big fiscal spending package to save the day."We haven't had any bazooka reaction by the government," Luis Costa said in a CNBC interview. "This is the crux of the issue here. Over the past 10 years we developed the sense that the Chinese government can steer the economy to prosperity."He added: "We have to revise that assumption now."To be sure, China has passed <a href="https://markets.businessinsider.com/news/commodities/china-economy-commodities-industry-retail-stimulus-recovery-growth-property-market-2023-9?_gl=1*12pj4e3*_ga*MzE5NjcxNzA3LjE2OTU3NDM1ODY.*_ga_E21CV80ZCZ*MTcwOTU3ODkwMS42MDEuMS4xNzA5NTc5MjQzLjU5LjAuMA..">stimulus measures</a> to prop up its sputtering economy, but historically, the policy is not popular among the top brass in Beijing, and President Xi Jinping has <a href="https://www.businessinsider.com/china-economy-shrinking-xi-jinping-debt-real-estate-american-world-2024-1">not been a big believer</a> of doling out direct cash payments to people.Either way, the government hasn't been able to fix the economic spiral so far. China is the <a href="https://www.businessinsider.com/china-economy-markets-deflation-chart-investors-consumer-prices-outlook-beijing-2024-3">only major world economy battling deflation,</a> its property sector is <a href="https://www.businessinsider.com/china-economy-crash-real-estate-collapse-property-market-rebound-evergrande-2024-2">still in the doldrums,</a> and the country is <a href="https://markets.businessinsider.com/news/stocks/china-economy-chinese-stock-market-foreign-investor-cash-flow-money-2023-12">hemorrhaging foreign capital.</a> The <a href="https://finance.yahoo.com/quote/000300.SS/history">CSI 300</a>, a benchmark index for the Chinese stock market, has tanked 16% in the past year.This week, China will hold its annual "Two Sessions" parliamentary meeting where they will release the country's 2024 growth target and outline plans to revive the economy. For investors, the key agenda will be the fiscal policy outlook. "[Tuesday's] statements will be a lot more important than today's — a lot of scrutiny in terms of the fiscal targets," Citi's Costa said. "We know that fiscal is the number one lever, but it's still very troubled waters for the Chinese economy."Last month, Vice Finance Minister Wang Dongwei <a href="https://www.reuters.com/world/china/chinas-fiscal-revenue-growth-picks-up-2023-2024-02-01/" target="_blank" rel="noopener">said</a> public spending remains the main tool through which the government hopes to support its economy.China's stock market capitalization hit a peak in 2021, Costa noted. It's down 35% since, shedding about $7 trillion in value. In the same timeframe, India's stock market capitalization has risen 60%, and the US stock market value has climbed as much as 22%."Something structural happened there, and it's very difficult to fix," Costa said.Some experts have warned that a massive stimulus package could <a href="https://www.businessinsider.com/china-economy-outlook-beijing-real-estate-markets-ehman-2024-2023-12">pave the way for China's "Lehman moment"</a> by worsening some of the underlying issues causing problems for the economy.

There's no fiscal 'bazooka' that China can aim at all of its economic troubles, Citi strategist says

<ul><li>Former <keyword id="64190" type="POSITION" weightage="20" keywordseo="RBI-Governor">RBI governor</keyword> <keyword id="6358908" type="DEFINITION" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> believes that the government’s top priority should be allocating financial resources towards medical supplies required to fight the <keyword id="8829783" type="UNKNOWN" weightage="20" keywordseo="coronavirus-pandemic">Coronavirus pandemic</keyword>.</li><li>He told India Today in an interview that the second priority should be providing assistance to <keyword id="6903191" type="UNKNOWN" weightage="20" keywordseo="poor-households">poor households</keyword>.</li><li>Only when those two things are taken care of should the government think about introducing a monetary or fiscal stimulus to help the economy, Rajan said.</li></ul>Former RBI governor Raghuram Rajan believes that the government’s top priority should be procuring medical supplies to fight the <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">Coronavirus</keyword> pandemic. He said that no expense should be spared in its battle to control the spread of Covid-19. “We need to spend money on medical supplies, ventilators, and masks — on getting protective equipment for medical workers. This means getting resources from private, public, defence, retirement — every resource — and quickly,” Rajan said speaking to India Today. . Rajan explained that even though temporary income support would make sense, the government’s resources are already very limited. “This is not the time to discuss that,” he said about a possible economic and monetary stimulus that the economy might need. However, the finance minister Nirmala Sitharaman on March 24 said that an economic stimulus package would be announced “sooner than later”. She also announced a list of compliances that have been relaxed including delaying IT return filing et cetera. As per Rajan’s list of priorities, the second step should be to address the marginalised sections of the community. Making sure that the livelihoods of poor households — both rural and urban — have enough to sustain themselves. Only when these two critical issues have been addressed, should the government allocate finances towards fixing the economy, according to Rajan. How should the government handle the Coronavirus’ impact on the <keyword id="6356076" type="DEFINITION" weightage="20" keywordseo="indian-economy">Indian economy</keyword>? According to Rajan, everyone is looking at China right now to see if their preventive measures against the spread of Coronavirus will hold. It has already reported a dip of 10% in its GDP during the first quarter. The estimates for Europe and the US also indicate a double-digit fall during the second quarter. When it comes to India, it’s important to make sure that the temporary pandemic shock on the economy doesn’t become a permanent feature, according to Rajan. The downturn of the economy leads to a slowdown in cash flow and takes away the income of workers. He points out that if this carries on for long enough, it could lead to substantial layoffs and firms closing down. “When the Coronavirus is under control, there won’t be a lot of economic activity because those businesses won’t start up again,” said Rajan. He said that even though the government can’t necessarily offer financial support — it can offer partial guarantees and incentivise banks to continue extending credit. See also: <a href="https://www.businessinsider.in/finance/news/no-minimum-balance-use-any-atm-all-the-changes-for-bank-customers-in-india-amidst-coronavirus-related-lockdown/articleshow/74791418.cms">No minimum balance, use any ATM⁠— all the changes for bank customers in India amidst Coronavirus-related lockdown</a> <a href="https://www.businessinsider.in/policy/economy/finance-minister-nirmala-sitharaman-speech-highlights-and-updates/articleshow/74789836.cms">The big announcements from India's Finance Minister Nirmala Sitharaman</a> <a href="https://www.businessinsider.in/india/news/coranavirus-cases-in-delhi-news-and-updates/articleshow/74773842.cms">The third stage of coronavirus spread in India can be delayed but not stopped, says ICMR</a>

Raghuram Rajan says save people before saving the economy

<ul><li>CLSA believes that in the next 18 months, RBI might cut 75 basis points or 0.75% in interest rates. </li><li>It already cut its base lending rate by 1.35% this year. </li><li>CLSA expects base rate to come down to 4.4% by early FY21. </li></ul>The Reserve Bank of India (RBI) will have to take up an extra responsibility—of pushing the slowing growth in the country. In the last few months, central government too had played its part by reducing corporate taxes and other moves. But the sluggish economy might need more impetus, and the government may not have the cash for it. Research firm CLSA believes thatRBI might end up cutting 75 basis points or 0.75% in interest rates in the next 18 months. This will help banks lend more at lower interest rates, which will help push the economy. The banking regulator has consistently cut the rate at which it lends to banks at every monetary policy since February this year. In all, it reduced its repo rate by 135 basis points to 5.15%. But as per CLSA, it will have to come down to 4.4% by early FY21. “Absent fiscal options, the onus for stimulus remains with monetary policy. The government’s fiscal position has already been stretched by the corporate tax cut, which will widen the fiscal deficit by around 0.7% of GDP,” the CLSA report said. To provide a fiscal boost, the government had reduced corporate tax rate to 21.1% from 34.2%. While this came as good news to many companies, the exchequer has to pay for it. It will also translate to tightened budgets of state governments, which will spend less as tax revenue falls. Government is one of the largest spenders across schemes and measures, and is a key driver of the economy. Added to that, private entities are also not keen on expanding as capital goods imports have almost remained steady. Apart from the existing banking crisis which is leaving them weary of lending, corporates too are wary of growth in times when consumption is shrinking. In fact, large FMCG companies are resorting to price cuts to reverse the slowing trend. “Consumption prospects are clouded by declining rural real wage growth. On RBI’s estimate of sticky 3.8% nominal wage growth for rural labourers over the last 12 months, the rising inflation measure for rural labourers means their real wage growth has turned negative,” the CLSA report said.

India is fast running out of cash to boost the economy-- putting the onus on RBI

By Bijay Kumar Singh New Delhi, May 10 () India needs a large fiscal stimulus as the country faces big risk of slowdown in the economic growth due to COVID-19, former chief economist of World Bank Kaushik Basu said on Sunday.He also suggested that the government may need monetisation by the Reserve Bank of India.In an interview to , Basu said inequality in India is already very high and coronavirus pandemic will make it rise further."There are dark clouds over every economy in the world, and India is no exception."...We do need a large fiscal stimulus. India has the FRBM Act, 2003, for fiscal management and to make sure that government does not overspend. But the FRBM is a sophisticated piece of legislation that recognises that, during times of natural calamity, we should be allowed to run up larger deficit," he said.Moody's Investors Service on Friday said it has estimated India's GDP growth to hit 'zero' in FY21, and pointed to a wide fiscal deficit, high government debt, weak social and physical infrastructure, and a fragile financial sector.The Centre must give states the freedom to spend more, respecting India's federal structure, Basu said, adding that if this continues for too long, it can unleash inflation, so this will have to be a short-period intervention.Replying to a question on need of monetisation, which is loosely referred to printing of currency by the Reserve Bank, he said, "We may need monetisation by RBI but I would recommend using that very sparingly"."Inequality in India is already very high and so this is worrying. My fear is that the coronavirus pandemic will cause inequality to rise."I am in favour of wealth being taxed and inheritance being taxed. No one should be born into extreme poverty and that cannot be corrected without a wealth tax and inheritance tax," he stressed.Basu, currently a professor of economics at Cornell University, noted that amid risks during this crisis, the governments should begin to control and micro-manage the economy and society."We need a team of talented bureaucrats and even professionals from outside government to take charge of designing the trade off between the pandemic and the looming economic crisis."Over-policed economies are a recipe for disaster. From the movement of global capital and the rupee depreciation, it is clear that global players are worried about this," he said.On India's strategy to exit from the lockdown, he said several countries in Europe and East Asia have started easing restrictions, and one can see the benefits they are getting from exchange rates and capital flow data."It is not easy exiting from the lockdown but if India is determined, India can do it," Basu said.Elaborating further, he pointed out that when it comes to COVID-19 deaths, India's numbers are lower than in all European nations."Germany is one of the world's best managed nations but the risk of COVID-19 death in Germany is 80 times greater compared to India."We must not make the mistake of locking ourselves down in a fear psychosis. This can cause an economic setback for many years to come," he observed.India is under nationwide lockdown till May 17. Prime Minister Narendra Modi had first announced a 21-day nationwide lockdown from March 25, which was later extended by two more weeks, to contain the virus spread.Several experts have cautioned that the lockdown is severely impacting the economy, and many rating agencies and industry bodies have forecast a sharp dip in the country's economic growth rate for the current fiscal. BKS BAL

COVID-19: India needs large fiscal stimulus, says Basu

New Delhi, May 13 () Toyota Kirloskar Motor (TKM) on Wednesday said the fiscal stimulus announced by the government would help in restoring the economy in an effective manner. The automaker said the Rs 20 lakh crore financial package announced by the government would encourage industry to resume business operations. "We hope, through this new stimulus and the likely reforms, the industry will be able to iron out bottlenecks pertaining to liquidity, supply chain, demand, labour related issues and restore the economy in an effective manner," TKM Senior Vice President, Sales and Services, Naveen Soni said in a statement. Given the current situation, the company understands that it will have to operate alongside COVID-19 for a prolonged period, he added. "However, through this initiative, the government has inspired us to strengthen our preparedness and confidence to resume business operations while safeguarding the health and safety of all stakeholders," Soni said. The relief package would certainly support in helping the MSME sector, NBFCs, and also help in building demand in the lockdown 4.0 phase, he added. Soni said that Toyota has been strongly supporting the government's 'Make in India' initiative and has introduced various initiatives over the years through localisation of parts and components, empowering local suppliers and promising quality at par with the global standards. "We welcome the message for India to be self-reliant and the need to introduce strong reforms, which will further strengthen the Indian auto industry which is one of the key pillars of economic growth and has the distinction of having a globally competitive and very well developed supply chain with high level of localisation," he noted. The government is taking measures to boost supply side of the economy and the company now awaits its support to boost demand side, where government spending can lead to a faster revival of the economy, Soni said. MSS RVK

Fiscal stimulus to help restore economy: Toyota

<ul><li><keyword id="6361649" type="UNKNOWN" weightage="60" keywordseo="Goldman-Sachs">Goldman Sachs</keyword>' chief Asia economist Andrew Tilton told CNBC's "Street Signs Asia" he is "reasonably upbeat" on the economic recovery going into 2021. </li><li>He said: "We think Asia's really the best positioned of the major regions right now, just given the good control of the virus in most of the regions outside of India and some parts of Southeast Asia."</li><li>He said purchasing managers indices were better in September, suggesting momentum in the industrial sector remained strong. </li><li>He said a fiscal deal in the US between Republicans Democrats would bolster growth in Asia.</li><li>A <keyword id="10060328" type="UNKNOWN" weightage="60" keywordseo="blue-wave">blue wave</keyword> scenario where a Democratic president takes control of both the House and Senate would bolster growth but may also "pull forward" the timing of the next Fed rate hike," he said. </li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</li></ul>Asia is far better "positioned" to stage an economic recovery from the pandemic, Goldman Sachs' chief Asia economist Andrew Tilton told CNBC's <a href="https://www.cnbc.com/2020/10/06/goldman-sachs-says-asia-is-best-positioned-for-economic-recovery.html">"Street Signs Asia"</a> Monday. Tilton said he is seeing "reasonable global momentum" going in the fourth quarter. "We think Asia's really the best positioned of the major regions right now, just given the good control of the virus in most of the regions outside of India and some parts of Southeast Asia," Tilton said. "We just had a round of purchasing managers indices which were almost all better month-on-month, suggesting that industrial sector momentum remains pretty good," he added. Read more: <a href="https://www.businessinsider.com/stock-market-investing-advice-hedge-trump-covid-driven-volatility-mcdonald-2020-10">A CIO who earned up to 90% per trade during the March crash offers his 2 best strategies for protecting against Trump-driven volatility — and says the president's diagnosis will be the catalyst for a further sell-off</a><a href="https://markets.businessinsider.com/news/stocks/china-economy-manufacturing-activity-rises-in-september-2020-9-1029633953#">China's huge manufacturing sector continued to recover</a> in September, affirming the world's second largest <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword> is recovering from the pandemic. Tilton said most of the economic recovery in Asia has been led by the industrial sector, while the services sector lags somewhat. "In China, stimulus was less focused on providing income replacement to the consumer than for example what we saw in the US," he said.Read more: <a href="https://www.businessinsider.com/how-to-invest-in-5g-technology-stock-picks-neuberger-berman-2020-10">A Neuberger Berman investment chief says he's identified 3 overlooked ways to profit from world-changing 5G technology — and shares the stock picks best-suited for all of them</a>"You do see relatively more sluggish recovery in consumer spending there, but I think given the good control of domestic transmission of the virus in China, we are seeing services activity come back there as well. It is farther behind than manufacturing, but it is recovering," Tilton added. China is due to release its Caixin Services PMI reading for September this Thursday. Tilton said <keyword id="3906221" type="PERSON" weightage="60" keywordseo="fiscal-stimulus">fiscal stimulus</keyword> in the US would have a "positive spillover effect" in terms of growth to Asia, though he is not anticipating a deal before the US presidential election scheduled for November 3. Democrats and Republicans have been in a stalemate since July over the next size of the fiscal package. While House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin made some progress over recent days, a deal has still not been achieved. The Democrat-controlled House approved a $2.2 trillion stimulus proposal last week, but it is unlikely to be passed by the Republican-led Senate. Tilton said a "Blue Wave scenario", where a Democrat presidency led by <keyword id="99719" type="PERSON" weightage="60" keywordseo="Joe-Biden">Joe Biden</keyword> takes control of both the House and the Senate could pull forward the timing of a Fed rate hike. The Fed has so far indicated that it has no plans to inject any fresh stimulus into the financial system at this point, although interest rates will stay near zero until at least 2023. "In the event we have a Blue Wave...we think the prospects for a very large fiscal stimulus are probably bigger and that would have positive effects on growth but that would ultimately pull forward the ultimate timing of a Fed rate hike," he said. Tilton said: "We are still reasonably upbeat on the economic recovery going into 2021."

Goldman Sachs' chief economist says Asia is 'best positioned' to stage an economic recovery from COVID-19

Mumbai, May 5 () Global ratings agency S&amp;P on Tuesday said additional financial stimulus is "necessary" in India to fight the COVID-19 pandemic, despite the country's weak fiscal position. The stimulus is necessary to support the vulnerable segments of the society and also to prevent additional structural damage to the economy amid the lockdown which has suddenly stopped the business activity, S&amp;P said in a report. In March, the government announced a Rs 1.7 lakh crore relief package focusing on providing food security to the poor and providing money in their hands to fight COVID-19. Many industry watchers have said the package was too less, while some have backed the Centre for not front-loading the package, saying the longevity of the pandemic is not known. The quantum of a new stimulus package is a highly speculated aspect, with some industry watchers advocating caution and others pushing for more spending given the unprecedented nature of the pandemic. "In our view, the Indian government is likely to introduce additional fiscal stimulus measures, which could be broader in scale relative to efforts so far," the agency, which has a 'BBB-/Stable/A-3' rating on the sovereign, said. It added that apart from the direct fiscal transfers to the affected individuals, government officials have indicated a willingness to use a range of options available in their policy toolbox which may include additional support for the corporate and the financial sector as well. The agency said India's fiscal position has been weak for a long time now and is a major factor constraining sovereign credit rating along with the government debt. "Though the fiscal space is limited owing to the government's already-elevated deficit, additional measures could be necessary to support the vulnerable segments of the society, and to prevent additional structural damage to the economy amid the recent sudden-stop in the business activity," it said. S&amp;P added that India will show a "powerful recovery" in the economy in 2021-22, if it is assumed that the pandemic is contained and there is a significant improvement in the global economic conditions. However, if the damage to India's domestic economy is not sufficiently mitigated, the fallout could weigh on the recovery and result in downward pressures on the sovereign and Indian banks, it warned. The agency said systemic pressures for Indian banks could rise owing to the recently announced extension of the nationwide lockdown to check the COVID-19 spread. It said the Rs 1.7 lakh crore relief package along with liquidity easing moves from the Reserve Bank through the targeted long term repo operations will help temper economic risks. Amid speculation of an extension in the three-month moratorium, it said such a move can help borrowers suffering from temporary liquidity issues. Drawing from the commentary and data from Axis Bank, which announced its results last month, the agency said a fourth of the lender's borrowers by loan quantum opting for loan moratorium suggests that some of the stronger borrowers are also opting to conserve liquidity in these tough times. The agency said it will compare the same numbers with the commentary from other banks to assess Axis Bank, but maintained that its Rs 1,400 crore loss for the March quarter reflects a "rise in systemic risk". As of now, its negative outlook on the lender is reflective of the economic risks for the bank, and the Indian economy at large, remaining high, S&amp;P said. The bank will maintain its strong market position and adequate capitalisation over the next 18 months, it said, warning that a large unanticipated asset quality shock can result in a downgrade of the bank's rating. AA ANUANU

More fiscal stimulus measures necessary in India to fight COVID-19: S&P

New Delhi, Dec 30 () The government might breach the fiscal deficit target this financial year amid drop in the revenue mobilisation and expected additional expenditure by the government, says a report.
According to Dun &amp; Bradstreet's Economy Forecast, the need for fiscal stimulus has increased even as the government finances remain "strained".
"We expect that the drop in the revenue mobilisation of the government and likelihood of additional expenditure by the government might breach the fiscal deficit target in FY20," Dun &amp; Bradstreet India Chief Economist Arun Singh said.
The government has set a 3.3 per cent fiscal deficit target for the current fiscal.
Singh further added that given the resources constraints, increase in fiscal deficit might lead to crowding out of private investments.
According to the report, corporate liabilities are already higher. The balance-sheets of corporates, government, banks and households remain constrained or weak and revenue collection will play an important role.
"Revenue collection will thus be important for the government to implement a fiscal stimulus. To do that, tax reforms are needed. GST should be simplified further, and direct tax collections should increase," Singh said.
As per the report, the index of industrial production is likely to remain subdued in the short to medium term amid slowdown in demand, lackluster investment and weak exports.
Moreover, optimism of India Inc remains clouded and cautiousness amongst investors have increased over the various graft and compliance related issues in the financial sector, it noted.
D&amp;B expects Index of Industrial Production (IIP) to remain subdued by 0-1 per cent during November this year.
On the prices front, the report said food inflation is expected to remain higher, given the supply disruptions as crops have been damaged in many states, exerting upward pressure to the CPI inflation.
D&amp;B expects the CPI inflation to remain in the range of 6.3-6.5 per cent and WPI inflation to be in the range of 2.1-2.4 per cent during December 2019, respectively. DRR
BAL

Govt might breach fiscal deficit target in FY20; need for fiscal stimulus rises: Report

<ul><li>From tax collections to disinvestment to <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword>, the numbers are likely to be sharply lower than the projections in the last budget.</li><li>The coronavirus pandemic had led to two straight quarters of contraction in the economy and that is likely to hit the budget projections.</li><li>These are some of the estimates that you can use to pare your expectations based on ground realities.</li><li>Check out the latest news and updates on <a href="https://www.businessinsider.in/budget">Budget 2021 on Business Insider</a>. </li></ul>In an aspirational goal of becoming a $5-trillion economy by 2025, India’s Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> put forward some projections last February. However, the COVID-19 pandemic is likely to have thrown those estimates out of whack. In a year when the economy contracted for two straight quarters, the scary <keyword id="581165" type="PERSON" weightage="20" keywordseo="revised-estimates">revised estimates</keyword> should not come as a surprise. As Aditi Nayar, principal economist at ICRA put it, in a conversation with Business Insider, the numbers would be much lower than what was targeted last year given the ongoing pandemic. “We need to have very practical expectations,” she added. These are some of ICRA’s expectation from the revised estimates: <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Components </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY20 Budget targets </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICRA estimate </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Edelweiss estimate </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nirmal Bang estimate </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax revenue </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹24.23 lakh crore </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% shortfall </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15.1% shortfall </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">13.3% shortfall </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fiscal deficit </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.5% of GDP </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.5% of GDP </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% of GDP </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.4% of GDP </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Disinvestment receipts </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2.1 lakh crore </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.5 lakh crore </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.4 lakh crore </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.7 lakh crore </td></tr></tbody></table> The lockdown imposed by the central government in an attempt to contain the coronavirus in the country contributed to the sluggish revenue collection by directly impacting businesses' functioning. As per <a href="https://www.businessinsider.in/budget/news/fiscal-deficit-touches-135-1-pc-of-fy21-target-at-november-end/articleshow/80046874.cms">latest data released </a>by the Controller General of Accounts (CGA) at the end of November, the government's gross <keyword id="6435854" type="DEFINITION" weightage="20" keywordseo="Tax-Revenue">tax revenue</keyword> was at ₹10.26 lakh crore, contracting 12.6% during this fiscal year. According to ICRA, the tax revenue is likely to be 20% short of the ₹24.23 lakh crore expected by the Finance Minister in the last budget. ALSO WATCH: <a href="https://www.businessinsider.in/stock-market/news/exclusive-nilesh-shah-of-kotak-mahindra-amc-says-foreign-inflows-profit-growth-are-helping-sensex/articleshow/80339362.cms" data-type="tilCustomLink">One of India’s biggest money managers explains the mother of all bull runs using a bollywood blockbuster Amar Akbar Anthony</a> <div type="Youtube" id="v02oeojB4Jk" title="One Of India's Money Managers Explained ‘The Mother Of All Bull Runs’ Using Amar, Akbar, Anthony" thumbUrl="https://i.ytimg.com/vi/v02oeojB4Jk/mqdefault.jpg"></div> <div type="image" title="GST Collections 2020." msid="80401133" hostid="261"></div> While tax collections fell, the market crash due to the pandemic also put the brakes on disinvestment⁠— the process of government selling its assets like shares like in the case of Life Insurance Corporation of India (LIC), or entire companies, like Air India. Therefore, the government did not make as much money as it wanted to whereas its expenses increased. From the management of the pandemic, creating health infrastructure in a hurry, to supporting the poor with free food, and helping the struggling industries with the stimulus package. When the government spends more than it earns, the difference is called fiscal deficit. It is likely that the deficit may be nearly twice as much as the Finance Minister promised during her last budget speech. <div type="twitter" handle="BiIndia" handlename="Business Insider India🇮🇳" image="http://pbs.twimg.com/profile_images/1232926719016718336/sfffJHNV_normal.jpg" favoritecount="8" retweetcount="3" status="Economist vs Investor-- two different POVs on #BudgetInsider, @iyer_sriram in conversation with @ICRALimited's Adit… https://t.co/Ij3Ju6LJBL" createdat="1611227111000" id="1352210630531452929"></div> This pain may spill into the next year as well. Therefore, Nayar said that as long as Sitharaman’s estimate for the budget deficit is less than 5% for the financial year ending March 2022, it is acceptable. <div type="image" title="Fiscal deficit" msid="80401149" hostid="261"></div> The budget estimates for the upcoming fiscal year may be soothing as the economy seems to be turning a corner. “For the third quarter as a whole, we've got most indicators having shown a year-on-year expansion, and that again is something that's really important as an import for economists like me who need to figure out whether we are already, out of the recession or we are going to get out of the recession in the current quarter,” said Nayar. <div type="twitter" handle="BiIndia" handlename="Business Insider India🇮🇳" image="http://pbs.twimg.com/profile_images/1232926719016718336/sfffJHNV_normal.jpg" favoritecount="5" retweetcount="1" status="#BudgetInsider | &quot;Economic metrics indicate that India will be out of the recession by March 2021.&quot;: @ICRALimited's… https://t.co/yutrKaxSt1" createdat="1611238345000" id="1352257747866189829"></div> However, the revised estimates are going to look bad. The only question will be if they are better or worse than the expectations. SEE ALSO: <a href="https://www.businessinsider.in/policy/economy/news/recession-in-india-will-end-latest-by-march-says-a-top-economist/articleshow/80399198.cms" data-type="tilCustomLink">Recession in India will end latest by March, says a top economist</a> <a href="https://www.businessinsider.in/tech/apps/news/whatsapp-to-soon-introduce-voice-and-video-calls-for-web-multi-device-support-jiomart-integration-and-more/articleshow/80398791.cms" data-type="tilCustomLink">WhatsApp to soon introduce voice and video calls for Web, multi-device support, JioMart integration and more</a> <a href="https://www.businessinsider.in/stock-market/news/bitcoin-falls-10-after-report-suggests-a-critical-flaw-in-the-cryptocurrency-called-double-spend-may-have-occurred/articleshow/80390513.cms" data-type="tilCustomLink">Bitcoin falls 11% after report suggests a critical flaw in the cryptocurrency called 'double spend' may have occurred</a>

Do not panic when Finance Minister Nirmala Sitharaman reads out the revised estimates

New Delhi, May 15 () The stimulus packages announced by the government so far to mitigate the economic impact of COVID-19 will dent the fiscal deficit by 0.6 per cent of the GDP or Rs 1.29 lakh crore in the ongoing financial year, said a report by State Bank of India (SBI).With the announcement of an economic package focussing vulnerable sections of the society on Thursday, the government has so far provided a stimulus totalling Rs 16.45 lakh crore. This implies that the remaining nearly Rs 3.54 lakh crore of the Rs 20 lakh crore package announced by Prime Minister Narendra Modi on May 12 is yet to be announced. "All in all, the direct fiscal hit after the announcement of three packages is only 0.6 per cent of GDP at approximately Rs 1.29 lakh crore. However, support has been provided to the needy by facilitating their access to food and credit."Of the total announcement of Rs 3.16 lakh crore (on Thursday), the total cash outlay for the Government will be around Rs 14,500–14,750 crore. The impact of Thursday's package on fiscal deficit is expected to be a miniscule at 0.07 per cent of GDP," SBI's 'Ecowrap' report said.It further said the recent crisis has shown how important it is for a huge country like India to have an infrastructure which promotes inter-operability between States and the Centre. "The mission mode implementation of One Nation One Ration Card is a step in the right direction. So is making available the portability of welfare benefits for migrant workers and those having no ration card. "The changes in labour laws that are being mulled over in Parliament if implemented properly could bring positive changes in the status of the labourers in this country," it said. The Centre and States should, however, work in tandem to achieve these objectives within the mandate of overall labour welfare, the report stressed. As per the Economic Survey of India 2017, the magnitude of inter-state migration in India was close to 9 million annually between 2011 and 2016, while Census 2011 pegs the total number of internal migrants in the country (accounting for inter and intra-state movement) at a staggering 139 million. NKD CS ANUANU

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