SBI Budget 2020 Expectations: State Bank of India roadmap for govt to keep fiscal deficit under control

SBI Budget 2020 Expectations: The State Bank of India (SBI) wants a uniform fiscal consolidation path beginning FY22 from Finance Minister Nirmala Sitharaman in Budget 2020. SBI, the largest Indian commercial bank, is of the opinion that a uniform fiscal consolidation plan would help Central Government to keep on reducing the fiscal deficit by 20 bps every year till 2025.

Speaking on SBI, Budget 2020 Expectations Dr Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI said, "We will be glad if the expenditure cut is restricted to not more than Rs 1.5 lakh crore and that could push fiscal deficit to 4 per cent of GDP in current fiscal (Rs 1 lakh crore for fiscal deficit of 4.3 per cent of GDP). For next year, fiscal deficit is projected at 3.8 per cent of GDP. Again, we should not strictly  target fiscal deficit at 3.5 per cent 3.6 per cent levels for FY21, as such number would imply a lower amount of absolute fiscal deficit for FY21 that would again be non-transparent and non-credible to markets!"

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Dr. Ghosh said that the net borrowing and gross market borrowing for FY21 are expected to be around Rs 5.5 lakh crore and Rs 7.85 lakh crore respectively saying, "If more switches happen in the run-up to the budget, gross market borrowing can reduce further. We propose a uniform fiscal consolidation path beginning FY22 that would reduce the fiscal deficit by 20 bps every year till FY25. There is always the option in the interregnum of undershooting our deficit target as growth comes back to the system and this would be a market delight."

SBI expectations from the Budget 2020 is to provide a roadmap for aggressive monetisation of assets and ensure an end to the amount of funds stuck in litigation. The Group Chief Economic Adviser of the SBI said that SBI estimates suggest that the total stock of such Government assets that could be monetised could be at least Rs 28 lakh crore or 15 per cent of GDP! Additionally, it is now high time that the rules across Income Taxes and regulators are streamlined which has resulted in spiraling of litigation cases.

SBI share price was at Rs 320.30 (at 12:10 PM) and stock market experts are highly bullish about the SBI shares in long-term. SBI stock is one of the new year picks of the HDFC Securities. Dipen Sheth, Head- Institutional Research at HDFC Securities has give Rs 404 target for the SBI shares in one year.