Budget 2022 Live: Capex Yay, But FY23 Divestment Target Perplexing - Real Time Analysis By BQ Editors
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Perplexing FY23 Divestment Target?
Posted By Sajeet
The government has reduced the divestment target for FY22 to Rs 78,000 crore compared to Rs 1.75 lakh crore. The target for FY23 is pegged at Rs 65,000 crore. The government is classifying the divestment receipts now under Misc. Capital Receipts.
So far, the divestment proceeds for this year are around Rs 12,000 crore. The dividends received from public sector enterprises stood at Rs 40,201.47 crore.
The government is unlikely to sell 10% in LIC this fiscal. The divestment would be around 5% in the current fiscal. But not sure the government has factored in LIC proceeds for next fiscal.
Acute Borrowing Pressure
Post By Ira
In a continuation of Niraj's post, bond yields are now up 17 basis points. Bloomberg reports that gross borrowing for the year will be at Rs 14.95 lakh crore. That's only for the centre and that's huge. There will be larger than expected state borrowings too.
This is also a year when the RBI will not be able to do a huge amount to support government borrowing. Tough year for the rates markets.
Bond Market - Brace For Impact
Posted By Niraj
Fiscal Deficit at 6.4% is much higher than market expectation, and if one adds the state deficit, it is likely a shock to the bond market of some basis points. Compare that to the equity markets, which are probably going to like the big push to capex, as it is the need of the hour.
Oops...Crypto Tax New Provision
Posted by Menaka
FM says any income from transfer of any virtual digital asset to be taxed at 30%. Interesting wording. No mention of 'capital gains tax' here, just 'income'. But the way she said - could it apply to all crypto transactions?
Also a 1% TDS on transfer of virtual digital assets.
PS: Good that the 15% lower tax rate for new manufacturing units extended to 2024. Wish she had included service sector here.
Prudent Fiscal Management
Posted By Ira
The government's fiscal deficit for FY22 settled at 6.9%. They have announced consolidation of 0.5 percentage points, which takes the FY23 fiscal deficit to 6.4%.
Consolidation but at a measured pace.
For states, a fiscal deficit of 4% is being permitted again. This is also useful since state spending is critical in the next year. The government also plans to provide assistance of Rs 1 lakh crore over and above that.
All-in-all, the fiscal management has been prudent going by these pronouncements.
PS: We have taken note of the plan to introduce the digital rupee this year. We await details.