'Tax sops for middle class can be expected,' says Madan Sabnavis, Chief Economist, Bank of Baroda

Madan Sabnavis, Chief Economist, Bank of Baroda

“The Budget to be announced will be an exercise of managing several objectives: movement to fiscal prudence, stimulating growth without accompanying inflation, garnering more resources through non-tax measures and providing sops where necessary. As all these objectives would run in different directions, the FM will exercise considerable dexterity to moving ahead decisively on all counts. We do expect the deficit to be managed without any undue pressure on market borrowings; and this is critical from the point of view of the financial markets which are concerned on the direction of bond yields at a time when liquidity is near neutral in the system. A combination of tax sops for the middle class and more directed assistance to the poor can be expected keeping in mind the Elections in 2024, while the fiscal space will determine how much can be provided for capex. A lower growth rate in nominal GDP for FY24 will come in the way of making assumptions on tax collections for the year.”