MOVING STRATEGICALLY

THE GOVERNMENT IS ON TRACK TO MEET FISCAL TARGETS FOR THE NEW YEAR, DESPITE A GLOBAL BANKING CRISIS AND RISING INFLATION IN THE WEST

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Three years back on 1st Feb '20, when the Union Finance Minister Nirmala Sitharaman stood to present the Union Budget the mood was buoyant. The Budget for 2020-21 aimed to achieve a nominal GDP growth rate of 10%, which would translate to a real GDP growth rate of 6% to 6.5%. The government targeted reducing the fiscal deficit to 3.5% of the GDP. The Budget aimed to boost infrastructure spending, with a focus on highways, railways, and airports. However, just two months later Covid struck, and the GDP, instead of growing, contracted by 7.7% while the fiscal deficit shot up to 9.5% of the GDP

The Budget for 2022-23 too started with ambitious targets but the Ukraine war broke out within days of it being presented. Yet, the government managed to achieve most of the targets despite the war leading to an energy price spiral, inflation and supply constraints, and consequent rate hikes by global central banks including the Reserve Bank of India.

As the new fiscal started in April, the government finds itself staring at a new crisis sparked by bank failures in the US and Europe including that of the storied Credit Suisse, leading many to fear that similar troubles of the last few years await us. So will the government meet the fiscal targets set just a month back in light of the worsening global scenario?

The Budget sees expenditure rising 7.4% to ₹45 lakh crore in 2023-24, while revenues are seen growing 12.1% to 26.32 lakh crore, including an 11.7% growth in tax revenues to ₹23.30 lakh crore.

THE EXPENDITURE