Gopal Krishna Agarwal,

The last full-fledged budget before the general elections next year has resisted to be a populist budget and the Government must be applauded for it. It takes confidence and commitment to stick to the fundamentals of prudent book-keeping when it makes complete sense to go all out political. This attribute, which was also visible during the ‘Aatmanirbhar Bharat’ package in the wake of Covid – 19 crisis, will keep the economy on an even keel.

When the global economies are reeling under inflation and being sucked into recessionary cycle, India continues to be an outlier with manageable inflation, high GDP growth rate and well calibrated fiscal consolidation glide path. The difference of Modi Government’s approach to balance the macroeconomic challenges of fighting recession, controlling inflation and meeting fiscal deficit consolidation target is very much evident in budget 2023-24.

A major achievement of the Government has been its management of fiscal affairs. Several challenges on macro-economic front that stemmed from external factors and were unseen at the time of presentation of budget last year unfolded as the year rolled by. The actual expenditure on food and fertilizer subsidy for the current year is much more than was initially budgeted while the excise tax collected had to come down due to energy price relief provided to the consumers. Despite this Modi Government has managed to adhere to the budgeted target of 6.4 percent for fiscal deficit for the year 2022-23. The fiscal deficit target for the coming financial year has been put at 5.9 percent of the GDP. Thus the march on the path of fiscal consolidation continues and the Government has committed to bring it down in the range of 4.5 percent by the year 2025-26.

The highlight of 2023-24 budget undoubtedly has to be the increased allocation for capital expenditure which has been increased by 33 percent to Rs 10 lakh crore. Anyone, familiar with the concept of ‘multiplier effect’ of expenditure would know that government Capex has a much bigger effect on the economy than government or private consumption expenditure. After two consecutive years of increase in government Capex, the Government would have stepped off the accelerator, but, the increase in Capex under this context is really heart-warming.