India’s private sector may witness reduced borrowing costs as the 10-year bond yield may ease by 30-40 basis points in the next six months following commitment to fiscal consolidation, experts said at a post-budget meeting.
The Union Budget 2023-24 pegs the fiscal deficit for FY24 to be 5.9%, which is lower than the 6.4% estimated for the current financial year.
According to Sujan Hajra, Executive Director & Chief Economist, Anand Rathi Institutional Equity, fiscal consolidation in turn will reduce fiscal deficit that will enable more capital to be available for private companies to borrow and invest.
While discussing the Implications of Union Budget 2023-24, he said that the share of capital expenditure in total government spending will rise from 13% in FY19 to 22% in FY24, as a result of sharp expansion in public investment.
Incentives of MSMEs
The Union Budget, presented on Wednesday, has offered MSMEs the Vivad Se Vishwas II scheme for voluntary settlement of contractual disputes with government and its agencies as also amended section 43B of the Income-tax Act which provides tax disincentive for companies delaying payment dues to micro and small enterprises.
Apart from availing the above schemes, Rahul Renavikar, MD, Acuris Advisors also suggested existing exporters and aspiring exporters to avail the incentive under the newly introduced SPIC (Studies, Publicity and International Cooperation) scheme, where the government offers subsidies for marketing expenses incurred by MSMEs abroad.
Pending reforms
Speaking about the pending government reforms to support ease of doing business, Vijay Kalantri, Chairman, MVIRDC World Trade Center, Mumbai, pointed out that the country needs a simplified tax system that will reduce cost of compliance and curb incentive for tax evasion.
”It has been more than five years since the implementation of GST and this is the time to simplify the system by reducing the number of tax slabs, bringing real estate and fuel under the GST net to boost the housing sector and rein in inflation,” he said.
On the overall budget, he believes that it has enough positive announcements to promote economic growth and employment.
“The government has rightly increased allocation for infrastructure, railways, green energy, EVs and natural farming to support GDP growth and sustainable development,” he said.
