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The positive surprise for FY22 did not happen as the upside on tax collections, especially corporate and oil taxes, were mitigated by lower disinvestment proceeds (a gap of ~1 lakh crore) and some expansion in expenditure.

Somnath Mukherjee, Managing Partner & CIO, ASK Wealth Advisors, said that as a result, the positive surprise that was widely expected in the fiscal didn't materialise. Next year's numbers though have been pegged at a fairly modest level.

Total budgeted expenditure is up less than 5 per cent (over Revised Estimates for FY22), total revenue receipts are also budgeted at a modest 6 per cent growth. Add to it the very modest expectation of GDP growth (11 per cent nominal), and there seems to be headroom on both revenue and expenditure side later in the year for the government to intervene.

"But, and it's a sizeable but, a lot depends on global oil prices. Almost a third of the excess (over Budget) tax collections this year were on account of oil taxes. Oil, if it goes to $120-130 a barrel, will put pressure on the extraordinary excise/Customs duties on oil, unless the government is able to pass on another 30-40 per cent increase in the pump price of diesel/petrol. With inflation raising its head on multiple counters, it will be a tough act to pull through," Mukherjee said.

In terms of economic impact, it's a work-in-progress. The flat revenue expenditure budgeted is almost certain to be revisited in the middle of the year - especially allocations for key social expenditure like PM-KISAN, NREGA and subsidies. Twenty-five per cent rise in capex budget is good, but heavily dependent on government's execution capacities.

He added that bond markets should be wary, as they have shown in bond prices - the positive surprise on the fiscal didn't materialise for this year and the next year doesn't seem fully baked (even though based on conservative assumptions).