Key Points
The government is also likely to slow the pace of capital expenditure to rein in fiscal deficit...
The fiscal deficit target of 5.3% will be set by the government in FY25, keeping in view the fiscal consolidation path till FY26, as it normalises capital spending and refrains from any major announcements in the interim budget before the general elections, Icra and Barclays economists have said..
Increased aggression of smaller players and alternative avenues of spending such as higher spends on education, medical, telecom charges, are leading to softer growth in the FMCG sector," Abneesh Roy, executive director at Nuvama Institutional Equities, has said.. Consumer goods companies and analysts say demand for daily groceries and personal and home products in villages continued to trail urban growth in the December quarter but expect a steady recovery across markets on improving macro indicators, positive consumer sentiment and, importantly, increase in government spending in the election year...
Supporting the rural poor makes economic as well as electoral sense for the ruling BJP, despite its focus on fiscal prudence and the confidence it has gained from its wins in three key state elections last year which might have eased the pressure on it to compete with the opposition in promising freebies to poor voters..
There may be some intervention for certain vulnerable sections (in the interim Budget)," Pant said.. Low rural consumption could be a pressing issue for the government given its economic as well as electoral significance, and might override other considerations when it comes to the interim budget..
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