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Ahead of polls, Budget likely to be tightrope walk
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IANS | 28 Jan, 2023
The FY24 Union Budget is likely to be a tightrope walk, considering its
fiscal guidance and the 2024 Lok Sabha elections, Phillip Capital said
in a report.
"We estimate fiscal deficit for FY24 at
5.8-6.0% and FY23 at 6.2%. Muted nominal GDP growth (due to global
slowdown and low deflator) will constrain tax revenue and government
spending, compared to the strong pace in the last couple of years", the
report said.
Thus, the government's innovation will be tested -
to deliver an effective budget, encompassing capex, rural, social,
policy incentives, subsidies, and tax/growth buoyancy. In case the
government adopts an easy approach to the fiscal path, across-the-board
expansion can be expected and delivered.
In the upcoming budget,
we anticipate continued focus on PLI incentives (for new sectors),
Atmanirbhar Bharat (to enhance manufacturing, exports, while managing
imports), sustainability (supply/demand push towards renewable energy
and alternative technologies), and infrastructure expansion (defence,
railways, ports, logistics, and roads).
The government wants to encourage the adoption of the new income-tax regime, thus incentivisation is likely, the report said.
Fiscal
support to rural India will continue (adjusting for food and fertiliser
subsidy); we will be watching for any meaningful stimulus (low
probability considering fiscal constraints).
"We are expecting
decent capital expenditure outlay with cyclicals to outshine. Higher
allocation is expected for Defence Capital outlay, Roads, Metro
projects, Housing and Railways. PLI extension in the Automobile sector
(incentivising innovation and growth), Robotics (for make in India),
Metals (new steel grades), IT hardware, Footwear etc.
Transportation/Logistics might attract focus by increasing the modal
share of Railways (for cargo movement), growth in warehousing capacity,
and support for domestic manufacturing of containers. In Autos, we might
see extension of FAME subsidiary, and incentives for charging infra and
flex-fuel vehicles. With India's net zero target by 2070, Renewables
(Green Hydrogen/Ammonia/Solar/Wind/Biofuels) technologies will be on the
radar", the report said.
Total expenditure for FY23 clocked 62%
of BE by November end with 18% higher spend than the corresponding
period of previous years. Ministries that drove the spending were
fertilizer (142% of BE) due to higher subsidy outgo, followed by
railways (101%), roads (79%), atomic energy (72%), rural development
(69%), PDS (68%), home affairs (65%) and defence (64%). Decent spend was
noted among education (56%), agriculture (51%) and health (50%) while
spending was weak in petroleum (26%), water resources (32%), housing
(44%) and power (48%).
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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84.35
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82.60 |
UK Pound
|
106.35
|
102.90 |
Euro
|
91.00
|
87.90 |
Japanese
Yen |
54.30 |
52.70 |
As on 16 Aug, 2024 |
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