Fiscal deficit, or the gap between revenue and expenditure, dominated discussions on the eve of Union Budget after the Chief Economic Adviser in the Economic Survey favoured breaching the deficit target and official data showed the government's fiscal deficit touched 132% of full-year target at December-end because of slower revenue collections and a Rs 1.45 lakh crore hit from corporate tax rate cut. All eyes are now on the Budget to see how much slippage the Finance Minister affords. The purists would want to see the quality of government spending more than the quantum. As one economist pointed out, 60% of government's fiscal deficit actually goes into unproductive expenditure.
STREET PULSE: Where we stand Dalal Street is set to open for a special session today in view of the scheduled Union Budget presentation in Parliament. Most Asian markets are closed for the weekend and there are no cues from Nifty futures on Singapore Exchange either. However, the market is expected to take cues from a major slump in US markets in overnight trade.
HERE'S WHAT TO WATCH  | Asian markets are closed today |
| US stocks tumbled in overnight trade, with the Dow and S&P 500 index recording their biggest one-day falls since August, as fears that Chinese coronavirus epidemic would slow economic growth rattled Wall Street. Dow ended 603 points lower at 28,256, S&P500 lost 58 points to 3,225 and the Nasdaq 148 points to 9,150. |
| Crude oil prices slid a painful 15% in January — the biggest January slide since 1991— as the coronavirus claims the death of 213 souls and counting. Brent crude rose 31 cents to $58.60 a barrel on Friday and WTI 34 cents to $52.48 |
| The rupee on Friday surged by 26 paise to end at 71.32 against the US dollar, buoyed by the Economic Survey projecting a revival in economic growth next fiscal. |
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FM Set to Walk Tightrope... Finance Minister Nirmala Sitharaman is all set to unveil the Union Budget 2020 amid hopes that she would dole out major tax incentives to boost demand and revive market sentiment, and open the tap for a large government spending to keep the growth engines purring. Economists expect the government to set a deficit target of 3.6 per cent of GDP for FY21, up from 3.3 per cent targeted for this year. Financial markets are expecting a revisit of some of the controversial taxes like LTCG and DDT and tweaking of the personal income-tax slabs and rates.
Read More Economic Rebound Ahead?… The Economic Survey on Friday predicted a big rebound in GDP growth to an annual 6-6.5% in 2020-21 after it plunged to a six-year low of 4.5 per cent in the second quarter of FY20. It waxed lyrical about an economy focusing on wealth creation, driven by dashing new entrepreneurs in a pro-business atmosphere and accompanied by a revival of the government-business trust that broke down earlier this millennium. It hailed the invisible hand of the market and said competitive markets are needed to ensure a level-playing field that aids the best entrepreneurs rather than the best-connected ones. The survey argued that a 10% rise in new firms in a district raises GDP by 1.8%.
Read More Krishna to Helm IBM… Arvind Krishna will take charge as chief executive officer of IBM Corp in April, joining the elite ranks of India-born technology czars who lead some of the world's most valuable and consequential corporations that are battling for supremacy in the digital sweepstakes. The 57-year-old Krishna's ascension to the top job at IBM comes weeks after technology behemoth Alphabet elevated former Google chief Sundar Pichai as its CEO. Microsoft's Satya Nadella and Adobe's Shantanu Narayen complete this desi quartet that is charting the fortunes of the four global technology powerhouses with a cumulative market capitalisation of $2.6 trillion.
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Worrying Deficit… The government's fiscal deficit touched 132.4% of the full-year target at the end of December, mainly due to a slower pace of revenue collection, official data released on Friday showed. In actual terms, the fiscal deficit, or gap between expenditure and revenue, was Rs 9,31,725 crore, as per data released by the Controller General of Accounts (CGA). The government aims to restrict the gap at 3.3% of the GDP, or Rs 7,03,760 crore in the year ending March 2020.
Read More FY19 Growth Lowered… The first revised estimates for FY19 released on Friday showed India's GDP grew 6.1% in the year, down from 6.8% estimated earlier, mainly due to deceleration in mining, manufacturing and farm sectors. The lower base for FY19 will push up growth for the current fiscal to 5.7% from 5% estimated in the numbers released last month.
Read More Meanwhile... Brits Just Walked Out of the EU... To the recorded peals of Big Ben and the gentle fluttering of Union Jacks, Britain bade farewell to the European Union at 11 pm on Friday, severing ties to the world's largest trading bloc after nearly half a century and embarking on an uncertain future as a midsize economy off the coast of Europe. It is a departure that will upend settled relations in virtually all areas of society, the economy and security matters, while confronting Britain with new questions of national identity.
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