SBI Chairman Dinesh Khara has said the Union Budget 2023-24 has achieved a “balanced demand stimulus” to correct the output gap and that the budget is “sensitive” to the immediate concerns of the economy.
"The Budget has retained its focus on seven broad areas of inclusive development, last mile connectivity, infrastructure development, youth (employment generation), unleashing potential (innovation), green growth and financial sector which mirrors the broad strategy of the last year but with a wider scope and additional objective," says Khara in a post-Budget reaction.
On macro imprints in the budget, Khara says the nominal GDP growth is projected at 10.5%, which is "a reasonable figure". "The commitment to fiscal consolidation has been continued and the fiscal deficit is expected to stabilize below 6% at 5.9%."
According to the SBI chief, the thrust to capital expenditure has been encouraging with capital expenditure budgeted to rise by 33% to ₹10 lakh crore. "All other fiscal parameters show encouraging trends ensuring that fiscal policy has enough headroom to accommodate any future shock if warranted."
On changes in the new personal tax regime, the SBI chief says this will facilitate migration under the new exemption-less tax structure.
SBI deputy MD Saloni Narayan says the seven priorities of the budget are "well articulated and smartly interwoven", with special emphasis on traversing the last mile to ensure ‘inclusive development’ being its cornerstone.
Notably, Union Budget 2023-24 is structured towards seven priorities aimed to act as the ‘Saptarishi’ guiding India in the Amrit Kaal -- (i) Inclusive Development, (ii) Reaching the Last Mile, (iii) Infrastructure and Investment, (iv) Unleashing the Potential, (v) Green Growth, (vi) Youth Power, and (vii) Financial Sector.
According to the Union Budget, the fiscal deficit for FY23 is estimated at the same level of 6.4% of GDP as was estimated last year but in absolute terms, it is an increase of ₹94,123 crore. For the next fiscal, the fiscal deficit is pegged at 5.9% of GDP (or ₹16.6 lakh crore). "Assuming a conservative 6% real GDP growth rate (Economic Survey projected real GDP growth of 6-6.8%), this translates into an inflation of around 4.0%."
The SBI report says given that inflation in FY24 is likely to decline and WPI, that is primarily used to deflate nominal GDP, will turn negative in Q1FY24, real GDP growth in FY24 could turn out to be a pleasant positive surprise.
Additionally, the Centre’s gross tax revenue for FY23 has been revised upwards to ₹30.4 lakh crore, which is almost ₹3.2 lakh crore greater than the Budget estimate for FY23. The revenue target from taxation is supported by an 11% growth in custom duty, a 10.5% in income tax and a 10.5% rise in corporation tax. The tax buoyancy for FY24 is estimated at 1.0 (based on gross tax revenue). The GST collection target is budgeted to increase at 12% to ₹9.6 lakh crore over FY23 revised estimates.
