In the coming week, Finance Minister Nirmala Sitharaman will present her fifth and last full budget of this government Before the Lok Sabha elections in 2024. While next year’s interim budget may offer some electoral proposals, the Bharatiya Janata Party-led government will also be mindful of the flurry of state elections due in 2023. Ms. Sitharaman has an impossible task of balancing the pull and pressure on fiscal resources amid various headwinds, with one eye on creating a feel-good factor among voters and the other on addressing India’s twin deficit situation and driving growth. On exhibiting a suitable resolution to speed up. The buoyant tax revenue this year provides comfort on meeting the fiscal deficit target (6.4% of GDP). The finance minister will need to show a solid glide path to the 4.5% GDP target set for 2025-26, but the widening current account deficit is a more emerging concern. The goods trade deficit widened to an all-time high in the second quarter of this year, with net exports being the biggest external ‘drag’ on demand since 2012-13. Ms. Sitharaman will focus on raising customs duties on non-critical items to reduce the import bill, while also trying to ensure that Indian producers integrate with global value chains with prohibitive or inverted duty structures for inputs and intermediates Don’t miss out on opportunities.
The export engine that has driven India’s growth well into the recent past is likely to remain subdued this year in anticipation of a slowdown in the western world. Growth will be below the 7% expected this year, and the challenge is to prevent it from falling below 6%. The budget will continue to boost public capex along with private investment, which is yet to recover across the board. A portion of the residual resources will be earmarked for higher rural and social welfare spending, including food and fertilizer subsidies, as well as schemes such as MGNREGA and PM-Kisan. Defense spending plans will be closely monitored as they are cut in the recent pre-election budget. Waiting for a breakthrough, constituencies such as the working middle class want a revision in the tax exemption limit (fixed at Rs 2.5 lakh per annum in 2014) and other concessions to reduce the impact of high inflation on spending power. The government has not played much to the gallery in its innings, perhaps because it does not have as vocal or cohesive interest groups as farmers and corporates. But with an uneven recovery in consumption hampering the investment cycle, putting money in the hands of people to increase spending and facilitating more job opportunities for the youth, it will be difficult for India to drive its growth amid a world economy in turmoil. Would be the best bet for.