India’s Finance Minister to budget for stimulus, says ANZ

NEW DELHI – With India’s 2017/18 Budget due to be handed down on Wednesday (February 1), ANZ Bank is tipping Finance Minister Arun Jaitley to set a fiscal deficit target of 3.3% and is maintaining its 2017/18 financial year GDP forecast of 8% growth.

It says GDP growth will be driven by a recovery in consumption demand on the back of a strong rural impetus in the budget. In addition, a push on capital expenditure will pave the way for a recovery in investment demand.
ANZ believes the government will stick to its fiscal deficit target of 3.5% of GDP in for financial year 2016/17, pointing out that disruptions to corporate tax collections due to demonetisation are expected to be offset by strong excise collections and curtailments in capital expenditure.
It sees fiscal expansion as imperative to counteract the impact of demonetisation on consumption demand, particularly in the rural segment.
“We believe the Government will also use the budget to advance reform momentum,” ANZ says.
“ We will be keenly watching out for measures pertaining to: 1)the roadmap for simplification of direct tax structure; 2) increased digitisation in the economy; 3) roadmap for public sector bank recapitalisation; and 4) focus on cash intensive sectors to relieve the pain of demonetisation.  www.live.anz.com (ATI).