Yesterday when the Economic Survey was released, the Chief Economic Advisor-V. Anantha Nageswaran said “India’s economic recovery is now complete, India will perform well this year.”
This is a testimony to the fact that all the macroeconomic challenges revolving around the Russia-Ukraine War, spike in global commodity prices, accompanied by extreme weather conditions and China’s zero CoVID-19 policy, triggered inflationary pressures in many Emerging Market Economies (EMEs).
Taking insights from the Budget released by Finance Minister Nirmala Sitharaman today speaks on some very important numbers and estimates for the coming fiscal year.
Source: Budget documents 2022-23 In the Budget Speech for FY 2021-22, the Government would continue on the broad path of fiscal consolidation to reach a fiscal deficit to GDP level below 4.5 per cent by FY 2025-26.
Gross Domestic Product:
The real GDP in FY 2022-23 is expected to grow by 7.0% compared to 8.7% in FY 2021-22. Further, the nominal GDP growth is expected to be at 15.4% in FY 2022-23 against 19.5% in FY 2021-22.
Fiscal Deficit Estimates:
The Fiscal Deficit was projected at 6.4% of GDP in the Budget Estimates of FY 2022-23. The same level of FD/GDP ratio has been retained in the Revised Estimates(RE) of FY 2022-23.
The Central Government’s total expenditure (Revenue and Capital) during April to November 2022 was 24.43 lakh crore, or 61.9% of BE 2022- 23, recording a year-on-year (y-o-y) growth of around 17.7 per cent over April-November 2021. Total expenditure of the Centre in BE 2023-24 is estimated at about 45.03 lakh crore, representing an increase of 7.5% over RE 2022-23. A major contributor to the growth of the total expenditure in BE 2023-24 is the capital expenditure.
Interest payments paint a worrying picture with them rising three fold from 3.8lakh crore rupees to 9.4 lakh crore rupees. This has further increased to 10.80 lakh crore rupees which is 30.8% of the total revenue expenditure & 41% of the revenue receipts of the centre.
The Budget document states that the Central government finances have remained stable despite the external shocks. Gross Tax Revenue from April to November has recorded 15.5% growth on a YoY basis. Revenue receipts are also at about 64.6% of the budget estimates Additionally, the budgeted target of Non debt capital receipts(NDCR) was Rs.79,291cr, the collection went upto November 2022 which was 41,481 crores i.e 52.35% of the budget estimates. Non tax revenue was 1.98 lakh crore rupees which was 73.5% of the budgeted estimates and even higher than the five years moving average of 58.3% of the budgeted estimates. The major contributor to NDCR is receipts from LIC IPO and others in RE 2022-23.As the tax collections were buoyant, the fiscal deficit was narrowed to 58.9% of the budget estimates. This is much lower than five years’ moving average of 104.6 per cent of BE
Similarly, the Revenue Deficit during this period was 5.73 lakh crore which was 57.8% of BE, substantially lower than its five years’ moving average of 118.3 percent of BE.
Total Public Debt
Total public debt, including external debt at the book value of the Centre is estimated at 152.54 lakh crore in BE 2023-24 against 135.91 lakh crore in RE 2022-23. As a percentage of GDP, the total public debt is estimated to increase from 49.8% of GDP in RE 2022-23 to 50.6% of GDP in BE 2023-24. However, if the external debt is valued at the current exchange rate, the public debt to GDP ratio is estimated at 51.3% in BE 2023-24.
Fiscal outlook for FY 23-24:
In a nutshell, the experts believe that the government is on the right track from adhering to a fiscal prudence to charting a clear road map for fiscal deficit by sticking to 4.5% of GDP till FY26. An emphasis on capital outlay of Rs 10 trillion, focus on green growth, agri credit of Rs 20 trillion, rural and social sectors with push for infrastructure creation and lastly axing the tax for middle class are just cherries on the cake, which paves way for an excellent budget.