In just two days Budget 2023 will be presented in the Lok Sabha. This will be the government’s last full Budget before the general elections in 2024. This Budget could bring crowd-pleasing announcements and disregarded fiscal constraints of the economy. However, the latest survey of economists by Bloomberg says otherwise. According to the survey, the majority of economists expect this Budget “to steer clear of populist measures and focus on strengthening manufacturing and creating jobs.” Bloomberg polled 20 economists this month.
According to HSBC Holding Plc’s chief India economist Pranjul Bhandari, the nation’s path to fiscal consolidation will require a herculean effort. “Think of it like a long-distance cyclist that needs to keep pedaling hard to reach the finish line,” he said.
The report also said that since coming to power in 2014 this government has worked on fiscal consolidation. The Union Budgets, since Narendra Modi took office, show that with the exception of the epidemic years, when aid was increased, he has been reducing subsidies, the report said.
In the first year of the pandemic, India’s fiscal deficit shot up to 9.2 per cent of gross domestic product (GDP). Although it has been declining ever since.
Recently, the government has also stopped the free food grain scheme and trimmed energy subsidies. According to the report, this is accepted to enable about Rs 1 lakh crore ($12.3 billion) in government savings.
Also Read: Budget 2023: Is It The Right Time To Focus On Asset Monetisation To Generate Funds To Finance Infra Projects? Know More
Shunning wasteful expenditure is crucial for India’s robust, long-term growth as it frees up funds to build more roads and ports, and enhance logistics linkages, without bloating the deficit capped at 6.4 per cent of GDP in the year ending March, the report added.
According to Fitch Ratings Ltd, “Fiscal pressures could arise from upcoming national elections. But the incumbent government’s dominant political position likely limits these risks.”