Budget 2023: All You Need To Know
Finance Minister Nirmala Sitharaman will today present Budget 2023—the final full-fledged budget of the Narendra Modi government before the general election next year.
She will begin her speech in Lok Sabha at 11:00 am. You can watch it on the or on any of our social media platforms, including .
The annual statement of accounts comes amid macroeconomic convulsions stemming from a prolonged war in Europe and supply-chain disruptions triggered by China’s Covid Zero policy. India, however, has emerged as a bright spot in the global scheme of things.
In the run-up to the budget, the industry and taxpayers raised demands seeking measures to boost growth and incomes. While there is expectation of some changes in personal income tax, the Goods and Services Tax rollout has curtailed annual tinkering of indirect taxes.
How Will Sensex And Nifty React
The Indian benchmark indices have been almost flat despite scaling new records since the last budget as the economy faced multiple headwinds .
The Sensex and Nifty have risen 1.17% and 0.49%, respectively, from Feb. 1, 2022. Public sector banks, fast-moving consumer goods and auto sectors led the advances.
The headline indices also advanced leading up to Budget 2023 on Wednesday. The NSE Nifty 50 Index is up 0.33%, while the S&P BSE Sensex has risen 0.37% in the last two trading sessions.
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Key Highlights Of Economic Survey 2022-23
India’s economy is likely to grow 6.5% in 2023-24 compared with 7% this fiscal and 8.7% in 2021-22, according to the Economic Survey for 2022–23.
The recovery from the pandemic was relatively quick, with growth next fiscal to be supported by solid domestic demand and a pick-up in capital investment, the survey said. The uptick in private consumption has also boosted production activity, resulting in an increase in capacity utilisation across sectors, it said.
Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0%, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience—of its ability to recoup, renew and re-energise the growth drivers of the economy, the survey said.
The government is also on track to achieve its fiscal deficit target of 6.4% of GDP for FY23. “The gradual decline in the fiscal deficit as a percentage of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years,” stated the survey.
Click to read more on the Economic Survey 2022-23.
Expectations: Macroeconomics
Here’s what to expect from the Budget 2023 from a macroeconomic point of view.
Nominal GDP Growth
The government had estimated a nominal GDP growth of 11.1% in 2022-23 (that is real growth plus inflation). Against that backdrop, a number between 10.5% and 11.5% is estimated. A number much higher or much lower may be out of sync with market expectations or beliefs.
Fiscal Deficit
The consensus is a lower figure in the budget estimate for FY24 versus 6.4% in FY23. Most economists and experts that we spoke to expect a number of 5.9%. If it’s below the 6% mark, it will show that the government is serious about maintaining fiscal discipline.
Subsidies
Food subsidy in FY23 was Rs 2.9 lakh crore, including Rs 1.5 lakh crore for free food. There is an expectation that the food subsidy as a percentage of GDP would be lower in the FY24 estimates, with no expansion in scope envisaged. Similarly, fertiliser subsidy, which overshot FY23BE of Rs 1.1 lakh crore to more than Rs 2 lakh crore, is expected to moderate.
Market Borrowings
Most experts expect FY24 net borrowings to be around Rs 12-12.5 lakh crore, compared with Rs 9.3 lakh crore in FY23. This would mean that around two-thirds of the fiscal deficit will be funded by market borrowings. Keep in mind that the scope for going for an out-and-out populist texture to the budget looks bleak amid the heavy market borrowing in addition to the moderating tax revenue in FY24.
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