The upward revision in nominal GDP has given the government scope to increase fiscal deficit, while maintaining its proportion to GDP at budget target, CRISIL noted in a release.

India’s National Statistical Office in its first advance estimate has pegged the real GDP growth for fiscal 2022-23 at 7 per cent year on year compared with 8.7 per cent in FY22. The projection is the same as rating agency CRISIL’s forecast. The nominal GDP is pegged at 15.4 per cent for FY23 against 11.1 per cent estimated during the last union budget.

Given the latest update on nominal GDP, the government can increase fiscal deficit by ₹97,080 crore, while sticking to budget target of fiscal deficit at 6.4 per cent of GDP, it said.

This will help accommodate additional capital expenditure and subsidies incurred this year.

Based on the FAE, real GDP growth in second half this fiscal is expected at 4.5 per cent YoY, down from 9.7 per cent in the first half.

Manufacturing growth is seen rising mildly in second half (3 per cent versus 0.1 per cent).

Private consumption is expected to decline by 0.2 per cent YoY in the second half of this fiscal, after growing 17.2 per cent in the first. Private consumption remains slowest to recover to pre-pandemic levels.

Fibre2Fashion News Desk (DS)