Finance Minister Nirmala Sitharaman will present the Union Budget 2023-24 on 1 February. This will be his fourth full budget and the last before general elections 2024.
The budget is expected to seek to balance the needs of fiscal prudence against the desire to support economic activity, Barclays said in a recent report. “For the first time in three years, the pandemic is no longer the driving force for India Treasury policyHowever, there are many challenges before the government while preparing for the general elections in 2024.
The bank expects the fiscal deficit to hit the government’s target of 6.4% of GDP in FY22-23. For FY23-24, it looks like the budget will target a deficit of 5.8% of GDP, which means the fiscal deficit 17.7 trillion in the next financial year.
The bank said that with the increase in revenue, we expect the government to gradually reduce the deficit and allow a modest expenditure increase.
capital expenditure in focus
Keeping in mind the 2024 elections, the government will continue to increase capital expenditure over the next 2-3 years, including spending on public infrastructure projects – logistics, technology, infrastructure and public utilities.
“Ahead of the 2024 general election, we expect a number of large public projects to be announced and launched,” said Rahul Bajoria, MD and head of EM Asia (ex-China) economics at Barclays.
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