The macro-economic landscape has changed over the last month

Post-budget developments have altered India’s economic scenario slightly but enough to warrant high-level policy attention.

- Indira Rajaraman

India assumed the G20 presidency on a triumphant fiscal note at the Union Budget on 1 February 2023. But a few subsequent developments have slightly altered the macro landscape.

The most recent, on 28 February, is the second advance estimate (SAE) of gross domestic product (GDP) for the current year 2022-23, incorporating data for the third quarter. The real growth rate remains 7%, as in the pre-budget first advance estimate (FAE). However, the nominal GDP aggregate in the SAE is lower by 1 trillion relative to the FAE. That raises the normalized fiscal deficit (FD) for 2022-23 slightly, to 6.45% of GDP from 6.43%. Putting this together with changed numbers for the prior year, the closing consolidated debt of the Centre and states will also be slightly higher than my budget-based estimate of 86.9% of GDP.

In the forthcoming year 2023-24, the nominal GDP growth rate assumed in the budget applied to the (lower) SAE as the base yields slightly higher fiscal percentages. However, it is best to wait for the end-May GDP estimate based on all four quarters before making any adjustments.