By Nimish ShahIn light of the recession caused by Covid 19, the issue of growth versus fiscal discipline for framing the Budget 2021 will be the most debated one by the Government and Finance Ministry.
The winner is likely to be growth but given the ruling party’s past strong belief on fiscal discipline, it could well be a balancing act.
While fiscal slippage due to the liquidity support provided to the economy will surely drag down the fiscal deficit to around 7.5%, it will be interesting to see if the measures taken by the Finance Minister would bring it back to the FY21 target of 3.5%.
While the next stop would be at around 5.2% for FY22, the trajectory and measures around it could shape the way fixed income and equity markets react to.