Populist budget and additional spending may hurt fiscal deficit target

The Union Budget presented last week is considered a populist budget by the street has welfare schemes announced by the government means additional spending. One major concern is that 13 per cent higher spending figure in addition with rural focus may increase fiscal deficit. 
  
Increased expenditure may exceed the government projections mostly on account of increased spending owing to elections and other allocations made during the budget. The government in the budget presented on 1 February said that it plans to spend Rs. 27.8 lakh crore in fiscal 2019-20 which is higher by more than 13% over current fiscal. Further, the interim Finance Minister Piyush Goyal stated that the government may also provide additional support to the schemes if needed. Hence the spending limits may increase. This may hit the target 3 per cent fiscal deficit by FY21. The additional funding plus general election expenses may lead the government to reduce its spending on infrastructure development. 
  

On the contrary, it is believed that such spending will lead to higher consumption. The spending will be mostly to benefit rural distress, labour class workers who form a large part of the population.