Union Budget 2023-24: A Blueprint For Developed Economy

"This is the first Budget in Amrit Kaal," said Union Finance Minister Nirmala Sitharaman on 01 February while presenting the crucial and much-awaited Union Budget 2023-24.  

In a time when the entire world is preparing for an economic slowdown, Sitharaman's budget aims to build on the framework established by the previous budget and the design created for India@100.

"Our vision for the Amrit Kaal includes a technology-driven and knowledge-based economy with strong public finances, and a robust financial sector. To achieve this, Jan Bhagidari through Sabka Saath Sabka Prayas are essential, the minister said. 

The majority of business leaders praised the budget, noting that it is a roadmap for building the country with a continued emphasis on public spending on infrastructure, sustainable economic growth, and encouraging consumer demand while remaining on the course of strict fiscal restraint.

While talking about whether it is a political or populist budget or a post-pandemic one or a processing budget that is building a structural reform, economic experts noted that Union Budget 2023 is futuristic and growth-oriented. 

"This is a budget for the future, growth-oriented, and to some extent, we will have some direct benefits from the Capex structure that they have created," Yes Bank's Chief Economist Indranil Pan said. Most of the essential aspects of the budget hinge on how we can harness the efficiency and productivity of the economy by taking reforms down to the lowest segment of the masses."

Talking about the common man, Sitharaman said that the outlay for Prime Minister Awas Yojana (PMAY) has been enhanced by 66 per cent to over Rs 79,000 crore. 

Dr S P Sharma, Chief Economist, PHD Chamber of Commerce and Industry, said, "They have focused more on PM Awas Yojna, which is getting a 66 per cent boost from Rs 47,500 crore to Rs 79,000 crore. This is a major highlight of the budget, which is for the longer term and is a move towards the blueprint of a developed economy in coming times."

While talking about whether this budget is populist amid the general elections in 2024, Prasenjit K Basu, Chief Economist, ICICI Securities, said, "I think it is a fiscally very prudent budget and estimated the fiscal deficit to be 5.9 per cent of GDP, but at the same time it provides some tax relief to personal income taxpayers. So, in my opinion, it is a significant achievement."

The government will spend Rs 10 lakh crore on longer-term capital expenditure in 2023-24, extending a strategy adopted to revive growth in the aftermath of the Covid-19 pandemic. Notably, the number was higher than the Rs 7.5 lakh crore allocated in the Union Budget 2021-22 and the highest on record. However, the year-on-year (YoY) hike of 33 per cent is only marginally lower than the previous year's 35 per cent jump.

"The capital investments are projected to increase at a rate of 30 to 40 per cent and a 10 lakh crore route is earmarked for the capital expenditure, a great thing that is going to help the Indian economy with strong demand and production possibilities in the factories," added Sharma. 

Notably, the targets for the fiscal deficit for this year (FY23) are likely to be around 5.9 per cent of the GDP because nominal GDP is growing much faster than 15.4 per cent. It is expected to grow around 17 per cent in the current fiscal year. In the first half, it grew by 21.2 per cent. 

"The revenues are buoyant and the buoyancy in tax revenue is going to deliver a lower fiscal deficit than projected in the budget this year and for next year it will be even lower (close to five and a half per cent of the GDP)," added Basu. 

Experts also noted that there has been a 33 per cent increase in the government's capital expenditure means this remains a pro-growth budget which is going to provide a significant boost to the economy. 

However, while talking about the Budget execution challenges, Pan noted that even in this year, when states had received 1 trillion from the Centre as Capex, however, all had not been spent. 

"It is about 765 billion as they have put in the budget but if we actually go and look at the economic survey, the amount of pass-through that has happened till now is just about Rs 300 crore. This means there is a significant amount of lack that is happening in terms of Capex at the state government level where the efficiency of Capex is likely to be higher or estimated to be higher than the Centre level," Pan added.