Making Sense

Last week, India PMI release showed robust economic activity with input cost receding to 40 month lows . Markets also received the advance estimates of National Income for FY 2023 - 24.  The first advance estimates of Nominal GDP peg GDP at 296.58 Lac crores, lower than budgeted estimates of 302.85 Lac Crores. The Nominal GDP is estimated to grow at 8.90% as against budgeted estimates of 10.2%. The revision lower in Nominal GDP could entail either a 12 bps increase in Fiscal Deficit or a 37K cr reduction in fiscal deficit to retain a 5.90% Fiscal Deficit target.  Budget Estimates 2023 - 24 Fiscal Deficit in INR crs          17,86,816 Fiscal Deficit as % of GDP 5.90% GDP (in INR crs)       3,02,85,017     First Advance Estimates   ...

GoI announced the Union Budget on Feb 1, 2023. The Budget has been applauded by participants for sticking to the fiscal glide path, increasing the allocation for capital expenditure to Inr 10 trn, no populist measures ahead of the Elections, continuity of tax regime and credible forward projections. Key Highlights: Fiscal Deficit target of 6.40% for FY 2023 and 5.90% for FY 2024 FY Gross Market borrowings of Inr 15.43 trn and net market borrowings of Inr 11.80 trn in dated securities and Inr 50000 cr in T-bills. The number was lower than market expectations of Inr 16 trn in gross borrowings. Total expenditure of GoI increased inr 242,000 crore which was financed by increase in revenue receipts of Inr 144,000 cr and higher borrowings of Inr 98000 cr. The rise in expenditure, to the extent of inr 200,000 crs was primarily on account of food and fertiliser subsidy.  For FY 24, the budget assumes nominal GDP Growth of 10.50%. The tax revenue is estimated to grow at 12%. While growth in...

"We must all suffer one of 2 things: the pain of discipline or the pain of regret" GoI released the advanced FY 22- 23 GDP estimates.  According to the first advance estimates released by the government, India's GDP may grow 7% for financial year 2022-23. Nominal GDP is estimated at ₹273.08 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of ₹236.65 lakh crore. The nominal GDP growth for FY23 is estimated at 15.4% as against 19.5% in FY22. The key take away from the advance estimate release is higher nominal GDP growth gives cushion to the government towards an additional spending of 97K crore while retaining the fiscal deficit at 6.44%.  GoI efforts towards fiscal consolidation aim to bring fiscal deficit at 4.5% of GDP by FY26 which entails a 190 bps reduction in fiscal deficit over 3 years. This implies a 65 bps reduction with fiscal deficit at 5.80% could be targeted for the FY 24 budget.