Revenue Challenges Preclude Meaningful Budget Tweaks

Unless government improves its tax revenue performance, and meets its disinvestment targets, there will be a shortfall.

- By Rathin Roy, MD, Overseas Development Institute, London, and former director & CEO, NIPFP

GOING BY QUICK estimates, the Indian economy came back to its pre-pandemic level in second quarter of FY23. These are first estimates without the low base effect as there was a base effect even in Q1 because of pandemic in Q1 of previous year. Estimates show that whether in exports or manufacturing, recovery in growth is tepid.

The only place where we have seen some growth is consumption. But even that is offset by very high inflation. So, India has lost two years of growth, and the current growth picture is not good. This is the context in which one needs to look at Union Budget 2023-24 and the government's ability to spend more to spur growth.

To set the record straight, we were faced with tepid growth last year and the year before that also, which is why the government said in previous years that it will expand public spending on capital expenditure to trigger growth. If that has happened, the intended result, higher growth in current fiscal, is not visible.