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00:00That sort of money raised on the bond markets here. Why? And would it also presage some kind of fiscal consolidation? I wish certainly I think one big thing that the markets would be looking for is the size of the market, size of the issuance, and it's going to be at a record high. So I think what we will look for is for the supply to be busy on the demand side. Which of the buyers will be most interested? So you have usually I mean, the bond market is essentially dominated by domestic buyers. So suddenly have the banks open at this point. What you see is that for the banks, credit growth has picked up and they're trying to build up the deposit growth, do not support that kind of credit. So the appetite for banks next year on my debit subdued compared to fiscal 23. Apart from the foreigners, of course, they've got a small presence in the bond market. So you have the insurers and the provident funds will step in as well. Given the size of the borrowings, we do think that central bank which kept away from the bond markets this year would likely look into it in fiscal 24. So suddenly, one of the biggest takeaways for the financial markets and bond markets in particular would be how big the center's borrowings are. And we should remember that it gives a federal state. So you have center has been a states that borrow. So if you put together. If I've been to the tune of about 20 to 24 trillion. Certain radical, you know, what's the money being going to be useful here as well? Would it perhaps be that as a. Because let's not forget, this is the last budget before the election for the full year budget anyway. This is perhaps a populist budget. As a nation, we are heading into a year where 2020 is going to see fewer state elections and first half of many forward is going to be the general elections for the force of the prime minister. So ahead of this, one would expect budgets to typically get a take on a populist hue. But I think this time is gonna be a fine balance or the government is likely to think we're on the side of fiscal consolidation as well. In fact, we expect about 60 basis points of reduction in the fiscal deficit in the fiscal 2014. That's the year that starts April 23. So they will. We don't think they will stay committed to the path of consolidating finances. You know, after the pandemic is over and beyond that, in terms of populace, I think there will be a not a clear populace agenda. More so I think they will follow up with their move towards the ruling community. The high inflation last year did take a bite from the order wage growth as well as you have seen incremental weather. So I would think next year's focus would be much more. I'm supporting employment schemes, supporting some of the crop insurance programs, the health programs and housing. So that would be one of the components. But apart from that, we would think consolidation would remain pretty much a priority in the upcoming budget, which is the most crucial item view coming out of this. I think one of the items that need is the one that must be focused on would be. So that be capital expenditure by the central government despite the pandemic related spending in the past three years. The government has consistently been blowing more money towards, you know, there's always this part of committed expenditure which goes to salaries, pensions and all of that. But the part that goes towards war, developmental spending, which is more so to do with the spending. I think what allocation goes with how much does it increase by? We don't need to increase by as much as it did in fiscal 23, but we do Su Keenan being on about 15 to 20 percent increase in the expenditure towards capital expenditure, particularly towards infrastructure projects and also supporting states in that one gap in spending. So to me, I would think that. How much is allocated? What the breakdown is likely to go into would be NATO. Simone Foxman, to add, has a positive multiplier so suddenly benefit. Brother, I don't get a sense of, you know, what they might be doing in terms of simplifying a very, very complicated tax system that you have in India now. What are they likely to do with that? I mean, it is a capital gains regime, which is again, very, very, very complicated. And also, what about taxes for just the salaried workers, perhaps, as well? Derek's DAX have done very well. The collections have done well in the last few years. This year we might see the momentum slow a bit, mainly because of the corporates you had seen prices go up, input prices have declined, margins have been compressed. And like you mentioned, the 17th glasses, of course, have to contend with a high inflation as well. And when you adjust it for wage growth, real wages haven't grown vast much. But in terms of tweaking of rates, I would personally not expect any static tax changes, especially with rates. And there is some parts of the market that expect that income tax rates could be changed and they're going to increase in the exemption limit or changes in the slabs for exemption free arrangement. There might be some tweaks on that front, but I wouldn't really expect large scale increase in that scale change or tweak in the VAT tax rates and especially the vertical axis. Insofar as income tax is concerned, the piece is quite still narrow. So I think broadening out the taxpayers would be much more of interest rather than cutting tax rates policy. The earlier you talked about the Reserve Bank and how it sets out its policy, surely after this budget, what are you looking for? Rumor from them. The central bank will, I think, have two takeaways from the budget. Among other things, I think the key would be are there any measures, you know, which directly impact inflation, not could prove inflationary. So anything that is gives one can boost demand. Perhaps to some extent go against what the central bank is fighting for. And the other one would be if was the size of borrowings, because the RBA was so pleased that all of the manager. So on the first, I would think that if there is no clear populist measure as we expect, we don't think there's gonna be a populist push. In that case, it will be back to what the data is suggesting, which which at this point suggests that the inflation has done its bit and it's coming off. Its just back into the 2 to 6 percent target range for the central bank. And at the same time, in the global landscape, the expected to see Fed also gradually taper and then stop. It takes it by mid-year. Against this backdrop, we are looking for a 25 basis point hike at the February meeting. I would think after that, the central bank, the RBA, that would settle into a long pause because as inflation goes down, these effects are going to see growth go down as well. So the priorities will be twofold. Well, I mean, really goes we discussed before. It's not really ISE. And so say a sharper tool as it is in the countries are the use of monetary policy in terms of interest rates in particular as bringing down inflation. So would you say that they should perhaps pause now rather than wait and wait to see what happens after their next hike? So it's a viewpoint point. You have misread the monetary policy committee that decides on rates, which also includes the governor. They have their views have been diverging in the past couple of meetings. There is a section that now believes that inflation worries are less compelling and good buddies are going to be the ones that's going to dominate. So you've seen some dissents at the recent meetings? Yes. One could say that the inflation fighting has been done. Inflation is coming down. So the central bank would go ahead and force on a counter argument is that core inflation is still quite sticky. It's still at about 6 percent. And you've seen inflation come off. It's much, much more to do with goods inflation. Services pass through is still happening. So in light of this, we would think that one more rate hike and then to stop perhaps makes, you know, it could be justified. And at the same time, you'd also have video rates that would have come back into positive. And you need that at a time particularly when deposit growth is very much in need of the hour. So that these couple of factors make us believe that there could be one more move before a prolonged pause since.

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DBS: India's FY24 Budget Deficit At 5.9% Of GDP

DBS Bank Executive Director & Senior Economist Radhika Rao says she is pegging India's FY24 budget deficit at 5.9% of GDP. She speaks with Rishaad Salamat on "Bloomberg Markets: Asia." (Source: Bloomberg)

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