India’s retail inflation may ease slightly to 7% in May, from an eight-year high of 7.8% in April, economists at State Bank of India said, adding that the Center was still holding its fiscal deficit of 6.4% of GDP. can meet the deficit target. Thanks to conservative revenue estimates in the Union Budget for this year.
The full impact of recent measures, including a cut in excise duty on fuel products and a change in import-export tariffs for steel and plastics, will be visible only in the following months, economists said in a research report. . The price could reduce the pace of growth by about 35 to 40 basis points. One hundred basis points equal to one percentage point.
“Under the current circumstances, consumer price inflation is expected to average 6.5%-6.7% in 2022-23. Additionally, these measures are likely to have fiscal implications for the Center as well. [but] Considering the conservative budgetary estimates, the net fiscal implication could be around ₹66,000 crore , SBI Group Chief Economic Advisor Soumya Kanti Ghosh mentioned in the report.
The government has increased its fertilizer subsidy bill by Rs 1.1 lakh crore and announced a subsidy of Rs 200 per gas cylinder for up to 12 cylinders to around 9 crore beneficiaries of PM Ujjwala scheme. Import duty has also been waived on import of edible oil in large quantities.
“The total fiscal impact of these measures will be around ₹2.5 lakh crore. However, the revenue collections for 2022-23 are expected to be higher than the estimates in the budget as they were on the conservative side,” he concluded.