Fiscal Consolidation Likely At A Slower Pace, Says Nomura Report

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Fiscal Consolidation Likely At A Slower Pace, Says Nomura Report

Fiscal Consolidation Likely At A Slower Pace, Says Nomura Report

According to Nomura, the government will let pass its budgeted fiscal shortfall target of 3.2% of Gross Domestic Product for 2017–2018

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As per Nomura’s report, the government is likely to carry on financial consolidation slowly in the budget with a financial discrepancy target of 3.2% of GDP for the year 2018–2019, says a report by Nomura.

As indicated by the Japanese financial holding company, the government is going to present an excellent budget that will demonstrate the issues of the rural area and the problems faced by “common man” without putting financial consolidation at risk.

It also noted that myopic populism should not outweigh macro prudence.

The scheduled date for presentation of the 2018–2019 Union Budget is on February 1, 2018. The event holds importance as it is the only remaining full budget before the general election to be held on 2019. Taking into consideration the election and in the midst of constant farm hardships, an excessively populist budget could be a matter of concern.

Nomura further opined that the government may fail to achieve its financial deficit target, in its 2017–2018 budget, of 3.2% Gross Domestic Product and even alter it to 3.5% of the GDP.

The Group said that in spite of the wave of elections in a row, they anticipate the progression of financial consolidation to go on with the government aiming for a lower fiscal debit in 2018–2019, which is 3.2% of the GDP—a minor difference from the initially planned 3%.

The development of the rural areas and the land-intensive agriculture are expected to be the major segments of policy spotlight in respect of allocating the budget and its implementation, as said by Nomura. Development of basic facilities and infrastructure is also expected to witness a constant thrust this year, the Japanese firm alleged.

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