Budget 2023: The government is anticipated to prioritise rural development and infrastructure development.
The next Union Budget 2023 will prioritise infrastructure and rural development as the government seeks to enhance long-term growth while focusing on budgetary reduction.
Expenditure on agricultural and rural development might climb by USD 10 billion, or a 15% increase over FY23, according to UBS India Economist Tanvee Gupta Jain in a note. With this, the government could sustain double-digit growth of 20% in public capex throughout the current fiscal year, according to Jain.
She predicts that, in light of the 2024 general elections, the government would prioritise investment in these areas above tax cuts in its final comprehensive budget. She stated that the administration will limit expenditure and concentrate on deficit reduction in the budget. Based on the UBS economist, the government would generate additional budgetary headroom to reallocate funds to current rural initiatives like as MGNREGA, rural housing, and roads, among others.
In terms of growth, she anticipates the economy to slow significantly, with GDP growth of only 5.5 percent in FY24, significantly lower than the average forecast of 6%. There is a possibility that India’s economy would experience a major downturn as a result of decreasing global growth and synchronized fiscal policy compression.
Jain, on the other hand, acknowledged that India is in a relatively good position and estimates that the home economy can maintain potential growth of 5.75 percent to 6.25 percent in the medium run. Her assessment is predicated on the prospect of ongoing investment in capex, manufacturing, and digitalization.
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