According to a research by a leading economist at State Bank of India (NS:SBI). The government will face difficulties in the upcoming Union budget for 2023–24 in following to the blueprint for fiscal contraction amid reducing a inflation environment globally.
This may make it challenging for India to achieve a marginal gross domestic product (GDP) rate that is substantially greater than 10% with a deflator of around 3.5%. However, he added, this might also indicate a GDP increase of roughly 6.2%, which would be greater than expected.
Additionally, he stated that the India current fiscal deficit for FY23 will reach Rs. 17.5 lakh crore.
Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of india, forecasts that total government tax collections for FY23 will exceed budget estimates (BE) by approximately Rs 2.3 lakh crore. Due to higher direct tax collections (roughly Rs 2.2 lakh crore), higher GST tax collections (Rs 95,000 crore). But lesser dividends (roughly Rs 40,000 crore), lesser taxes net of cess (Rs 30,000 crore).
And lesser disinvestment tax collections (about Rs 15000-20,000 crore).
“In the meantime, with the increased subsidy bill and also the extra spending that the government has pledged. Expenditures are expect to be on the upper side of the budget estimates by about Rs 3 lakh crore.
In basis of this, the government’s budget deficit in FY23 is predict to total Rs 17.50 lakh crore.
According to Ghosh’s research, the government’s spending in FY24 is forecast to rise by about 8.2% over FY23 forecasts to reach Rs 46 lakh crore.
According to estimates, the FY24 subsidy bill. Which rose sharply in FY23, will drop to roughly Rs 3.8–4 lakh crore, while capital spending is anticipat to rise by 12%.
The growth in collections (after subtracting borrowing and some other obligations) is projected to be around 12.1%. With tax revenue collections set to grow by 11%. With nominal GDP development of 10%, taxation buoyancy is therefore anticipated to be close to 1.1 as opposed to the anticipated taxation buoyancy of 1.5 for FY23.
Forecast for Union Budget FY24
Accordingly, the budget deficit for FY24 is predict to be about Rs. 17.95 lakh crore, about 6% of GDP, leading to a fiscal contraction of 40 basis points from current fiscal, report concludes.
In terms of borrowing is concern, we expect. That the Center’s net market borrowing in FY24 will be in the range of Rs. 11.7 lakh crore, also with Rs. 4.4 lakh crore in repayments, gross borrowing is project to be Rs. 16.1 lakh crore. We foresee the announcement of a swap of approximately Rs 50,000 crore,” the report stated.
The states are going to borrow less money in FY23 than originally expected. Likely about Rs 8 lakh crore, due to increased revenue distribution from the Center.
“The total gross borrowing by the Centre and the States is project to Rs 24.3 lakh crore for FY24 (compared to Rs 22.2 lakh crore for FY23). And net borrowings are project to be Rs 17 lakh crore” (Rs 16.7 lakh crore for FY23). We also think that the govt will continue to depend on small savings programmes (Rs 5 lakh crore for FY24).
The government may give the Sukanya Samriddhi Yojana (SSY) a strong push by promoting new registrations in a campaign approach. And enabling one-time registrations for all lingering matters for up to 12 years, the report claims.