Will Union Budget 2023 boost Indian economy, what to expect
Finance Minister Nirmala Sitharaman will present the Union Budget 2023 today at 11 am. The manufacturing sector is expected to receive a boost, for which the government has launched the Production Linked Incentive (PLI) scheme. It would lessen India's reliance on China, pushing it toward becoming a manufacturing hub. Growth is expected to slightly dip to 6.5% for the coming fiscal year.
Why does this story matter?
The Union Budget is an annual financial statement furnished by the government. It lays out the current state of the economy and lays out a plan for the direction in which it is to be driven. After the last two constricted budgets owing to the COVID-19 pandemic, the recovery trend and inflation have boosted tax revenue, granting the government a greater spending hand.
Fall in growth likely, India fares better than others: IMF
A Bloomberg survey forecast that India's fiscal deficit could fall to 5.9% of the gross domestic product (GDP) from this year's 6.4%, which could see another year of record borrowing. The International Monetary Fund (IMF) projected a fall in India's growth but forecast it to be the world's fastest-growing economy as the situation looked less gloomy for emerging and developing Asian economies.
Gross fiscal deficit expected to be restricted to 6.4%
The finance minister is expected to continue on the longer path for fiscal consolidation, targeting to contain the central gross fiscal deficit at 6.4%, which is predicted to sober down to 3.5% only by 2025. Tax revenue could experience a downfall if inflation weakens or domestic demand slumps. However, experts say that the fall in revenue can't be checked by limiting spending.
Revision in GDP data marks shift from non-pandemic GDP trend
Though India has largely recovered from the pandemic-induced slowdown, the absolute GDP still faces a downward trend, chipping away at the progress in poverty reduction. Each revision in GDP data for peak pandemic years pushes actual GDP away from the no-COVID-19 GDP trend. The gap between the two signifies the extent of damage caused by the pandemic, which might need some time to recoup.
