Breaking from the earlier trend, Finance Minister Nirmala Sitharaman, while presenting Union Budget 2023, did not come out with populist measures in the pre-election year and prioritises long-term growth. Attempts to consolidate the fiscal situation and push growth are visible in her entire budget speech.
Going by the Indian history of union budget, we have seen that first year and fourth year of budget usually remains quite populist in nature, and many freebies are announced for voters. Nevertheless, this budget rightly avoided the populist measures and concentrated on long-term growth. The budget has tried to strike some balance between fiscal consolidation and growth, by continuing its focus on capital expenditure and creating fiscal space for that by cutting revenue expenditure.
Fiscal Prudence
The Union Budget of 2023 clearly shows that fiscal consolidation for FY24 continues to adhere to the projected glide path with a sub -4.5% target by FY26. It set a target of reducing fiscal deficit to 5.9% of the gross domestic product (GDP) in fiscal 2024, from 6.4% (revised estimate or RE) this fiscal. It also reiterated its commitment to bring the fiscal deficit below 4.5% of GDP by fiscal 2026.
Where will money be spent in FY24?
Additional government spending in FY24 is Rs 3,159 billion.
Share of additional spending:
Interest (44%),
Transport (40%),
Transfer to states (17%),
Energy (8%),
Defence (7%),
IT & telecom (6%),
Education/health (4%), and
home affairs/social welfare/agriculture (3%).
この記事は Indian Economy & Market の February 2023 版に掲載されています。
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