Budget 2023: Accelerating Sustainable Growth Trajectory

This budget demonstrates a continuity of the strategic intent of this government

The Union Budget 2023-24 tabled by FM has delicately balanced the aspiration of an emerging India, touching upon the expectations across stakeholders. From youth to retired and pensioners, farmers to corporates, women to artisans and tribals, each has a pie to devour.

The budget 2023-24 was envisioned and designed when a recessionary threat and geopolitical tensions marred the world economies and India battles with rising inflation and unemployment. Against the much-talked-of policy dilemma of economic growth versus fiscal prudence, this budget weaved a fine balance between the two. While it was a tightrope walk, the budget continued its determination towards fiscal prudence by setting off an optimistic roadmap for fiscal deficit targeting to narrow it down to 4.5 per cent of GDP by 2025-2026. Riding on the tide of increased tax buoyancy and phased-out withdrawal of pandemic support measures and subsidies, the deficit target for the current fiscal is fixed at 5.9 per cent of GDP against the budgeted 6.4 per cent for 2022-23. Anchoring the private sector sentiment further, the boost to capital expenditure by 33 percent to the amount of 10 lakh crore is well poised to support the projected GDP growth of 6.5 per cent spurring crowding in of private investment and unleashing the multiplier effect. Additionally, the hike in income tax rebate up to 7 lakh should be expected spur further private demand through the consumption channel with inflation tackled at a tolerable limit. These macro measures, along with an added thrust to capacity building in terms of urban planning, start-up and skill development and simplifying regulatory compliances for businesses, have certainly put India on an accelerated sustainable growth trajectory.

However, on the flip side, the budget needs a streamlined expenditure outlay for Higher education and R&D. It is silent on the regulatory framework guiding and shaping the growth of the Edtech industry. The current proposals are heavily skewed towards Health Care and Pharmaceutical industries, wherein R&D is an integral mantra of survival. While the budget has announced new Centres of Excellence for AI and Robotics, a structured plan of execution could have been in place. It was expected that the budget will provide an impetus to high end R&D aimed at creating Intellectual property (IP). While the gains made by PLI scheme in attracting precious FDI is laudable but an outlay incentivising R&D in specific higher education institutions and research laboratories could have spurred Indian firms to leapfrog from the imitation to innovation driven growth and a dominant role in the global value chain. Similarly, the concerns real-estate and construction industry which has been affected adversely by Covid-19 and tepid consumer sentiment has not been addressed adequately. The socio-economic significance of the construction and real estate industry can be underscored from the fact that it contributes 8 per cent to the country’s GDP, is the second largest recipient of foreign direct investment in India and is a major source of employment and employs approximately 51 million people, constituting 12 per cent of the country’s total working population. 

Overall, this budget demonstrates a continuity of the strategic intent of this government, presents a positive outlook for the country's economy and its finances and seeks to provide the right impetus in shaping India's future and driving it towards a path of sustainable growth and development.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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budget 2023 sustainable growth Union Budget 2023-24

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