Budget 2023: Indian economy on accelerated growth
According to media reports, the budget is expected to focus on reviving the economy and unemployment, which has risen sharply due to the COVID-19 pandemic
Post by MOHAMMAD HANIEF on Monday, January 30, 2023
Nirmala Sitharaman, Finance Minister of India is scheduled to present the budget for the financial year 2023-23 on February 01, 2023 during the budget session of Parliament which is set to start on January 31, 2023 and will be full of business opportunities to boost the economy of India. Budget interests everyone, from the common man to big industry or small-medium business owners.
President of India, Droupadi Murmu will address the joint session of Lok Sabha and Rajya Sabha in the Central Hall of Parliament to kick off the session and will make her first speech to the two Houses of Parliament since being elevated to the top position in July last year. The Economic Survey will also be presented to both Houses on the first day of the budget session.
On January 13, 2023, a pre-budget meeting was also held by Prime Minister of India, Narendra Modi with noted economists and sector experts at NITI Aayog, New Delhi and it was discussed that India can leverage several opportunities in areas of digitisation, energy, healthcare and agriculture even if there are risks due to the geopolitical situation.
The prime minister of India In his remarks noted that while there were risks, the emerging global environment offers new and diverse opportunities in areas such as digitization, energy, health care and agriculture. To seize these opportunities, public and private sector need to leverage synergies and think out of the box.
Prime Minister applauded the success of the India Digital story and the rapid adoption of fintech across the country, and the potential for inclusive growth and development it promises. He underscored Nari Shakti as a key driver of India’s growth and urged to continue making efforts to further enable and boost women’s participation in the workforce. In the ongoing International Year of Millets, Prime Minister highlighted the need to promote Millets in view of their potential to transform the rural and agri sector, with their attributes such as being carbon neutral, conducive to natural farming, and affordable source of nutrition.
During the pre budget meeting, the economists suggested ways in which India can sustain its development momentum. They also shared ideas on topics ranging from agriculture to manufacturing. Recognising that the underlying global headwinds are likely to continue, strategic recommendations were also shared for further strengthening India’s resilience.
The economy is facing several challenges, including persistently high inflation, a depreciating rupee, and subdued growth in exports. The ongoing Russia-Ukraine and disruptions in the global supply chains have adversely affected global economic growth.
There was agreement among the participants that India has emerged as a bright spot on the turbulent global stage due to its resilience and it was suggested that new growth impulses would need to build upon this foundation through holistic development across all sectors.
According to media reports, the budget is expected to focus on reviving the economy and unemployment, which has risen sharply due to the COVID-19 pandemic. The government is likely going to increase spending on healthcare and education, as well as to provide relief to small businesses and farmers.
The Union Budget is expected to put the economy on an accelerated growth path after the impact caused by the pandemic. Amendments in the tax law to bring about sustainable growth, infrastructure investment, focus on R&D spending, nurturing incentives to the core sectors including manufacturing and services, tapping the huge experience of running captive centres are some of the priority items on the agenda of the government as the preparation get underway to unveil the budget. Ease of tax compliances, simplification and digitisation are the cornerstones to enhance the ease of doing business in India, Deloitte a leading global provider of audit and assurance says in its pre budget report. It further says that amidst a possible global recession and international political instability, the economy has stood resilient and is well on its way to a growth rate of 7%.
To support India’s US$5 trillion economy ambition, the industry holds high expectations from the Budget 2023-24 especially promoting ease of doing business through tax reforms and continued CAPEX with a focus on infrastructure. Business leaders in India are confident that Budget 2023-24 will help fuel economic growth across sectors and industries, amidst a potential global slowdown and geopolitical instability.
About 60 percent of India Inc. surveyed is optimistic about India posting above 6.5 percent growth during this period. Amongst industry sectors, chemicals (72 percent), capital goods (70 percent), and energy (67 percent) expressed confidence in growth being high, and felt that government initiatives, such as Atmanirbhar Bharat, PLI, and favourable monetary policies by RBI (to moderate retail inflation and maintain significant forex), increased spending on infrastructure, and research and innovation, will further this momentum, the report says.
The last two years have been difficult for the world economy on account of the COVID-19 pandemic. Repeated waves of infection, supply-chain disruptions and, more recently, inflation have created particularly challenging times for policy-making. Faced with these challenges, the government of India’s immediate response was a bouquet of safety-nets to cushion the impact on vulnerable sections of society and the business sector.
It next pushed through a significant increase in capital expenditure on infrastructure to build back medium-term demand as well as aggressively implemented supply-side measures to prepare the economy for a sustained long-term expansion. This chapter explains how this flexible and multi-layered approach is partly based on an “Agile” framework that uses feedback-loops, and the monitoring of real-time data.
The financial system is always a possible area of stress during turbulent times. However, India’s capital markets, like many global markets, have done exceptionally well and have allowed record mobilization of risk capital for Indian companies. More significantly, the banking system is well capitalized and the overhang of Non-Performing Assets seem to have structurally declined even allowing for some lagged impact of the pandemic.
(The author is a regular columnist and can be mailed at firstname.lastname@example.org)