I think this is going to be probably the first budget post Covid; in a sense I am saying Covid is over and 2022-23 will be largely Covid-free or the process of restoration to normalcy will happen. We are talking about a fiscal deficit number of 6.5%. We used to struggle at 3.3-3.4%. The tax collection is buoyant and on top of it, the finance minister Nirmala Sitharaman has a huge fiscal space.
Now how does she help the lower end of the population to bring back demand and restore their income and confidence in consumption and restore demand so that private capex can start. That would be the focus of the Budget and we are hearing that the NREGA scheme and free food and all those things will be extended. But it requires a little more than that and it is slightly higher than that. It also needs some kind of help in terms of making things more affordable for the masses. The inflationary pressure is high, with a 6.5% deficit, inflationary pressure will continue to mount in the next 12 months or so. So some concession in making things cheaper would be required.
When the Budget brought down the corporate taxes, that was seen as one of the cornerstones of really pushing the corporate India profitability higher because at the moment it was announced, people did not realise this but subsequently, the ripple effect it could have on corporate India made it a very big step that was taken. In this Budget too, could the finance minister pull out a rabbit from the hat?
If we have a 6.5% kind of fiscal deficit, then there is a lot of room for what she wants to do. Now the issue is what are their priorities because this is an election year in a sense that we have an election in our head in the next 30 days and we are preparing for 2024 for the eventual big election. So clearly politicians will keep that in mind while doing this and the voter base. I am not talking about the top end of the population. They are in any case well protected but rather the mid and lower end