The union budget this year is a significant one, since it will be the last time before the 2024 Lok Sabha polls, that the government will announce policy decisions. With eyes on state and general elections, measures that will benefit the common man might be expected, but the government also needs to ensure growth for businesses while curbing inflation. According to Morgan Stanley, the Indian government is more likely to focus on fiscal consolidation, and will prioritise investment-driven growth.
The budget is expected to boost capital spending in both public and private sectors, while focusing on ease of living for common consumers. The bank is also hoping for India to show a path towards fiscal deficit reduction with a medium-term strategy to reduce the central government's deficit to 4.5 per cent of GDP.
The report expects the fiscal deficit to go from 6.4 per cent to 5.9 per cent of GDP, and capex to go up to increase to 2.9 per cent of GDP in 2023-24 from 2.8 per cent. Price rise will also slowdown and retail inflation will reach 5.4 per cent, which is lower than the RBI's tolerance ceiling.
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