Budget to focus on roadmap of Vikisit Bharat by 20247, says Morgan Stanley

Morgan Stanley on budget: Global brokerage firm Morgan Stanley anticipates that Finance Minister Nirmala Sitharaman's forthcoming Budget will underline the government's roadmap for achieving 'Viksit Bharat' (Developed India) by 2047, and outline a medium-term plan for fiscal consolidation.

Morgan Stanley's research report on Wednesday highlighted that the Budget is expected to prioritise capital expenditure over revenue expenditure, alongside targeted social sector spending aimed at improving access to physical, social, and digital infrastructure. 

Sitharaman is set to present the full Budget for the fiscal year 2024-25 on July 23, marking the first major policy document from the new government.

The brokerage firm predicts that the central government's fiscal deficit target will be maintained at 5.1 per cent of GDP for 2024-25, aligning with the interim budget projection (down from 5.6 per cent of GDP in 2023-24), and is on course to achieve the goal of 4.5 per cent of GDP by the next financial year.

"The fiscal headroom has improved with a larger-than-expected transfer of surplus from the RBI, which, in our view, will help to maintain the momentum on capex expenditure and increase targeted welfare spending. In this context, we see the possibility of a slightly lower fiscal deficit target (just below 5.1 per cent of GDP), given the support from tax and non-tax revenues," the report stated.

Morgan Stanley also expects the Budget to outline the government's vision for 'Viksit Bharat' by 2047, along with a roadmap for fiscal consolidation beyond 2025-26.

The report noted that the Budget's impact on the stock market has been on a secular decline, with actual performance often influenced by pre-budget expectations. Currently, the market appears to be approaching the Budget with optimism, which could lead to volatility and a correction post-budget, based on historical trends.

(With PTI inputs)