by Madan Sabnavis, Chief Economist of BoB

“We do believe that the starting point of the budget will be the fiscal deficit and efforts will be made to lower the ratio by 0.5% to probably close to 4.3-4.4% of GDP for FY26. Within this framework, the budget would work to maintain, if not increase capex, in the range of Rs 11 lakh crore which will provide a fillip to investment (the revised estimate for FY25 could be lower than what was projected). Benefits for MSMEs and industry are also expected through the PLI scheme with probably a special dispensation for the former. There could be some minor rationalization in subsidy outgo through better targeting of beneficiaries. It would, however, be interesting to see if there are any special rebates offered on income tax given that consumption has been affected due to high inflation this year. From the perspective of banks, a more favorable tax slab for interest on bank deposits will help to provide a level field with equity markets and also provide incentive to deposit holders.”