Budget 2023: Ambitious or Ambiguous Masterplan

Economic Survey released on 31st January this year had projected that the GDP growth in 2022-23 will remain 7% whereas for the year 2023-24, it is forecasted to be 6.5%.

- Dr. Rajiv Khosla

The estimates of receding growth in India are in line with such estimates revealed earlier by the IMF, World Bank, etc. The growth slowdown necessarily connotes a decrease in income, both for the individuals as well as the economy. Despite decreasing growth, Finance Minister (FM) presented a Budget that lays down an increase in total expenditure from ₹39.44 lakh crore in 2022-23 to ₹45.03 lakh crore in 2023-24. It indicates that one or more of the following options could have been adopted by the FM while preparing the Budget viz. increase in taxes, increase in borrowings or decrease in public expenditure.

The first option i.e. to finance total expenditure considerably through the imposition of more taxes gets nullified on account of slowing growth amid high unemployment in the economy.

It left the FM with the latter two options. A preliminary investigation of the budget documents reveal that both increase in borrowings and decrease in public expenditure have been resorted to. To the extent borrowings are concerned, government is prepared to borrow nearly ₹18 lakh crore in this fiscal which is ₹1,25,620 crore higher than the budgeted figures of 2022-23 ( ₹31497 crore than revised figures of 2022-23). It is pertinent to mention here that government is already reeling under high debt (expected to reach ₹155 lakh crore by March 2023) and another ₹18 lakh crore sourced this year is going to make the going tough for the government. Not only the interest payments are a cause of concern, rather the amount that was borrowed by the government in 2014 is also getting due this year for repayment. A brief of interest payment liability of the government of India for the past one and a half decade or so, is highlighted in table 1. Mounting interest and principal repayments compelled the government to prune the public expenditure.