Making Sense

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...

The Union Budget is drawing to a close and I thought of putting down my estimates for the Government Borrowing program.  GoI will present the Union Budget on Feb 1 , 2023.  In accordance with the amendment to the FRBM act, GoI targets to reach the fiscal deficit level below 4.5% of GDP by 2025-26. The Finance Minister said, “We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period. We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land.” This entails an annual reduction of 60 - 65 bps in the fiscal deficit number.  Accordingly, FY 24 fiscal deficit is pegged at 5.80% and gross borrowing at 16 trn. For FY 24, budget comes ahead of a heavy state election schedule and 2024 Lok Sabha electi...