Overall, the budget is significantly conservative on the spending side while being hugely optimistic on the revenue side, with the fiscal glide path posing a fiscal logjam. Together, the fiscal policy, while addressing consumption side marginally, (0.5% of nominal PFCE) it will continue to be a drag on the overall economic growth.
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Systematix Research Report
The Union budget tries to address the intensifying concern of rising income distress of households, but the fiscal math is significantly optimistic on the revenue side and conservative on the spending.
We foresee the fiscal knot sustaining even in FY26, leading to sustained cutback in capital outlay. With total expenditure much less than the projected nominal GDP growth in FY26, the fiscal glide path will imply a continued fiscal drag; the impact of income tax rebate amounts to just 0.5% of household consumption!!
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