Five key figures that investors need to look for in India’s budget

Ahmedabad's overall economy as Modi urges precautions against virus ahead of Indian festival season

Photographer: Sumit Dayal / Bloomberg

India’s annual budget on Monday will be the chance for Prime Minister Narendra Modi to boost demand and investment in an economy cratered by the second largest coronavirus outbreak in the world.

His government’s plans for growth will be presented by Finance Minister Nirmala Sitharaman when he will deliver the budget speech starting at 11am in New Delhi. It expects to allocate more money for health care and infrastructure development and to pay part of it by raising record amounts by selling stakes in state-owned companies.

Read: India increases GDP growth by 11% in fiscal year 2022, helped by Vaccine Drive

While the success of the budget depends on how effectively India is able to counter the growing vaccine infections in the country of over 1.3 billion people, here are five key numbers to look out for in your spending plan:

Nominal GDP

India’s economy is expected to return next year

Source: Bloomberg, Government of India

IMF India’s economy forecast will expand by 11.5% in the year beginning in April, which is higher than the 9.2% estimated in a Bloomberg survey. Add inflation of about 4.5% to these projections and you will get a nominal growth rate of gross domestic product in the range of almost 14% -16%. The number is essential, as the budget assumptions for revenue and expenditure are based on this. Some economists, including Samiran Chakraborty of Citigroup Inc., expect nominal GDP to be set at 15% – the end of the group.

Tax revenues

Tax spending in India is expected to increase by 19% next year

Source: Citi Research, Government of India

Tax collection in India has shown an increase lately, as the momentum grows in the economy, after lifting blockages to combat the coronavirus outbreak. This should give Sitharaman reasons to set global tax revenues higher than the 16.3 trillion rupees ($ 223 billion) budgeted for the current year.