SBI pitches for big spend, tax status quo in Budget

The government should spend big to revive the economy and refrain from making any changes to the tax structure in the upcoming Budget, says State Bank of India Group Chief Economic Advisor Soumya Kanti Ghosh.

"It should be a Budget which should actually propel expenditure and it should not talk about any new taxes," says Ghosh in an interview to Cogencis.

"I have said this clearly that fiscal support is more important than monetary support because monetary policy support has run its course," Ghosh said.

"So the upcoming Budget should focus on fiscal support from the government." Ghosh said he favours an expansionary Budget, but he would like to see the

roadmap on how the government plans to spend the additional money over the next couple of years because "that will also give confidence to the market that this money is not for profligate purposes".

Ghosh sees India clocking a nominal GDP growth of 15% in the next financial year, and expects the fiscal deficit at 5.2% of GDP, sharply down from the projected 7.4% in the current financial year.

He argues for setting a realistic fiscal deficit target for the next financial year as the economy is still recovering from the disruptions caused by COVID-19. "Austerity is one thing and prudence is another.

This year (in the Budget), the fiscal deficit number should be very realistic," Ghosh said.

A fiscal consolidation roadmap is needed but tightening of fiscal deficit should be done progressively, he said. "I think 3% (fiscal deficit) target and all those things should go out of the window as of now because we should now talk in terms of a range, rather than a number," he said.