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Budget’s growth focus to face macro challenges

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4 years ago

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The Budget is focused on growth, but will face macro challenges, Japanese brokerage Nomura said in a report.

First, the ability of the government — both central and states — to spend 2.9 per cent of GDP on capex will face execution hurdles. Identification of projects, on-the-ground implementation, coordination with different agencies — all typically lead to a smaller amount being spent than allocated.

Second, if revenues disappoint or other expenses rise (higher subsidies or more allocation towards rural employment, for example), then there is a risk of the capex amount being pruned.

Third, we see other growth challenges. India is currently in the midst of a business cycle recovery. However, we expect India’s growth to decelerate from H2 CY2022 onwards, reflecting weaker consumption demand from low income households (due to scarring effects and high inflation), weaker export growth and continued sub-par private capex due to low capacity utilisation.

Rising oil prices (a negative term of trade effect) and tighter global financial conditions are also growth headwinds.

Hence, if the capex-led push is not fruitful, then the growth slowdown could be material. We currently expect GDP growth of 8.7 per cent y-o-y in FY22 (reduced recently from 9.2 per cent owing to the impact of Omicron.

Nomura said we continue to expect higher inflation and wider current account deficits, largely due to rising commodity prices, although an expansionary budget may also play an incremental role. On inflation, while food prices appear in check, core inflationary pressures are rising across clothing, household goods and services and personal care items.

Firms are passing higher input prices onto consumer prices. Domestic fuel prices are currently on hold, but will likely be adjusted higher after the state elections. We expect services price inflation to also rise as the economy opens.

We expect elevated global commodity prices, high inflation and steady domestic demand to result in higher imports, widening the current account deficit to 2.6 per cent of GDP in 2022, up from a deficit of 1.3 per cent in 2021.

The Budget is unambiguously focused on reviving growth, via higher public capex. Capital expenditure generally results in a higher growth multiplier, so the continued focus on infrastructure spending, including support to states to spend on capex, is important at a time when private capex is sluggish.

The government expects to miss its budgeted fiscal deficit target of 6.8 per cent of GDP for FY22 (year ending March 2022) marginally, with an actual outturn of 6.9 per cent (Figure 1). The sharp rise in receipts of corporate taxes, robust income taxes and strong indirect taxes (in part due to higher fuel excise duties in the first half of the year) have resulted in net tax revenues exceeding budget estimates by Rs 2.2trn (1.0 per cent of GDP). However, contrary to our expectation, the government has revised up its capex commitment for the year by Rs 485bn (0.2 per cent of GDP), though this primarily reflects the government clearing its liabilities of the recently divested Air India. Also, in line with our expectations, revenue expenditure (revex) has been higher by Rs 2.4trn (1.0 per cent of GDP), reflecting the second wave support package, food and fertiliser subsidies, export incentives and extra spending by some departments. Finally, the disinvestment target has now been calibrated lower by Rs 970bn (0.4 per cent of GDP).

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PM Modi’s visit results in India-UAE defence, energy pacts, $5 billion investment deal

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15 hours ago

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May 15, 2026

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New Delhi, May 15: India and the United Arab Emirates signed key agreements, during the visit of Prime Minister Narendra Modi on Friday, on a framework for the bilateral strategic defence partnership, the supply of LPG and strategic petroleum reserves, and an investment to the tune of $5 billion US dollars in Indian Infrastructure and RBL Bank and Samman Capital.

An agreement was also signed for setting up a ship repair cluster at Vadinar.

Speaking during delegation-level talks in Abu Dhabi, Prime Minister Narendra Modi said, “India stands shoulder-to-shoulder with the UAE in every situation, and it will continue to do so. For the restoration of peace and stability, India will extend all possible cooperation.”

He said it was important that the Strait of Hormuz remains “free and open” and added that international laws must be respected.

The Prime Minister thanked UAE President Mohamed bin Zayed Al Nahyan for strengthening the India-UAE comprehensive strategic partnership and said bilateral cooperation had gained greater importance in the current global situation.

PM Modi said both sides had agreed during the UAE President’s January visit to India to qualitatively upgrade relations and had already made significant progress in a short span.

“I extend heartfelt gratitude to you for taking our comprehensive strategic partnership to new heights. During your visit to India in January, we agreed to qualitatively upgrade our relations. Even in such a small duration, we have made significant progress in all matters. In the kind of situation we have at hand today, the importance of India-UAE strategic cooperation has vastly increased. In the time to come, we will go ahead together in every area,” he observed.

PM Modi said the impact of the conflict in West Asia was being felt globally and stressed that dialogue and diplomacy remain the best way to resolve issues.

The Prime Minister arrived in the UAE earlier in the day and received a ceremonial welcome. Later, he held bilateral talks with UAE President Mohamed bin Zayed Al Nahyan, popularly known as MBZ.

Prime Minister Narendra Modi began his five-nation tour from May 15 to 20, covering the UAE, the Netherlands, Sweden, Norway and Italy. The visit aims to deepen India’s strategic and economic partnerships across key sectors, including energy, defence, technology, green transition and trade.

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Attention Mumbaikars! Petrol, Diesel Prices Hiked By ₹3 Amid Global Oil Crisis Due To Iran War; Check New Rates Here

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18 hours ago

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May 15, 2026

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Mumbai: Ending days of intense speculation, the Centre on Friday announced an immediate Rs 3 per litre hike in petrol and diesel prices across the country, marking the first revision in retail fuel rates in nearly four years. The revised prices came into effect immediately from Friday without any transition window. Along with petrol and diesel, the price of CNG was also increased by Rs 2, a move expected to have a wider impact on transportation and household expenses.

In Mumbai, petrol prices climbed to Rs 106.68 per litre after a hike of Rs 3.14, while diesel rates rose by Rs 3.11 to Rs 93.14 per litre. The increase is likely to hit daily commuters, cab and autorickshaw operators, and logistics businesses in the city, where fuel costs directly affect transportation fares and commodity prices.

Among the four major metro cities, Mumbai recorded one of the steepest hikes in petrol prices. In Delhi, petrol prices rose to Rs 97.77 per litre and diesel to Rs 90.67 per litre. Kolkata saw petrol prices increase to Rs 108.74 and diesel to Rs 95.13, while in Chennai, petrol now costs Rs 103.67 and diesel Rs 95.25 per litre.

The hike comes amid mounting pressure on state-run oil marketing companies due to rising global crude oil prices. Earlier in March, Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) had raised the prices of premium petrol and diesel, but rates for regular retail consumers had remained unchanged until now.

According to reports, the three oil companies were collectively absorbing losses of nearly Rs 1,600 crore daily as they continued purchasing crude oil at elevated international prices while avoiding a retail hike. The Centre had reportedly delayed revising fuel prices in an attempt to keep inflation under control, since fuel costs have a cascading impact on transportation, food and essential commodities.

The pressure intensified after conflict in West Asia pushed crude oil prices sharply higher in the global market. India’s crude basket, which averaged around USD 69 per barrel before the Iran conflict escalated in February, later surged to nearly USD 113-114 per barrel in subsequent months.

Earlier, Prime Minister Narendra Modi urged citizens to conserve fuel and adopt work-from-home practices wherever possible to reduce fuel consumption and ease pressure on India’s foreign exchange reserves. Supporting the appeal, Delhi Chief Minister Rekha Gupta announced a 90-day fuel conservation campaign and two days of work-from-home for government offices.

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MGL raises CNG prices by Rs 2 per kg across Mumbai region

Published

2 days ago

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May 14, 2026

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Mumbai, May 14: State-run gas distributor Mahanagar Gas Limited (MGL) has hiked compressed natural gas (CNG) prices across the Mumbai Metropolitan Region (MMR), raising retail rates by Rs 2 per kg.

Following the latest revision, CNG will now cost Rs 84 per kg across Mumbai, Thane, Navi Mumbai and other parts of the MMR with immediate effect.

The fuel was previously priced at Rs 82 per kg. The latest hike comes amid rising input costs and prevailing market conditions.

Reports claim that soon after the increase in CNG prices, auto-rickshaw unions demanded a revision in fares, arguing that repeated fuel price hikes were adversely impacting drivers’ earnings.

Union representatives have sought at least a Re 1 increase in the base fare for auto-rickshaws and urged the authorities to take a decision at the earliest.

According to the unions, the continued rise in operating costs has made it increasingly difficult for drivers to operate vehicles under the existing fare structure.

The latest price revision is expected to impact daily commuters across the Mumbai Metropolitan Region, where CNG remains one of the primary fuels used by auto-rickshaws, taxis and public transport vehicles.

Earlier this month, the government said the country has adequate stocks of petroleum products and that LPG supplies for domestic cooking remain stable.

Meanwhile, shares of Mahanagar Gas Limited traded nearly 3 per cent higher in morning trade on Thursday, touching an intraday high of Rs 1,072 on the BSE. The stock has touched a 52-week high of Rs 1,586 and a 52-week low of Rs 902 on the exchange.

The company reported a net profit of Rs 130 crore for the fourth quarter of FY26, while revenue stood at Rs 2,052 crore.

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