A leading bank in Singapore has said India's interim budget for the financial year 2019-20, which was presented in the Parliament on Friday, has a strong focus on the rural and agricultural sector and also suggests that economic priorities have taken precedence. Singapore's DBS Bank has said that there was a marginal slippage in the FY19 and FY20 fiscal deficit targets, resulting in a sharp increase in the borrowing quantum.

In a commentary on the budget, it said the announcements suggest that the economic priorities have taken precedence over near-term fiscal consolidation as the 3 per cent of Gross Domestic Product (GDP) fiscal target stands delayed. Radhika Rao, economist at DBS' Group Research, said that the consumption-push and growth stimulus will be positive for growth, but
limits scope for an aggressive monetary easing cycle. She added: "We also note that this Interim Budget holds till July 2019, when a full-year budget is likely to be tabled, after the
general elections."

The outgoing year and FY20 marked a modest fiscal slippage. The government revised up the FY19 fiscal deficit at -3.4 per cent of  the GDP vs -3.3 per cent in the budgeted estimate. She said this was broadly in line with our expectations where -3.5 per cent was seen a red line for any deterioration in the math. The slippage is more notable for FY20, to -3.4 per cent vs -3.1 per cent laid out in the roadmap, built on a 11.5 per cent nominal GDP growth projection.

She added that recent reduction in GST rates, higher thresholds and wider umbrella of tax payers under the composition scheme are also likely to slow collections further in FY20. "Income tax revenues are also projected to improve, factoring in a wider tax base and improved compliance. Under other revenue heads, excise duty collections are expected to moderate as oil prices ease and past tax cuts bite," she added.