Social Sector: The budgeted outlay for the social sector might be considered lukewarm especially at a time when it needs the most support. The overall budget for the Department of Health and Family Welfare at ₹83,000 Cr has gone up by less than ₹1,000 Cr compared to the revised estimates for FY22, which is ₹82,921 Cr. For education, the budget for school education at ₹63,449 Cr is a mere increase of 6% in nominal terms compared to the 2020-21 budgeted estimate of ₹59,845 Cr. India already stares at a weak position of having deficient spending in critical areas of social protection, education, and health. This negligence does not bode well with the developmental aspirations of the nation.
Industry: The central government's massive increase in Capex is likely to augur well for industrial, engineering, and capital goods. Construction, cement, and other home building materials will also boost from continued focus on affordable housing. This will help trigger the virtuous cycle of income generation and spending, thus raising the overall consumption demand in the economy. Higher levels of economic activity should also enhance credit growth for banks that are struggling to maintain their balance sheets currently.
In contrast to earlier budgets, there is a lower disinvestment target this time around. While a realistic target is always better than overpromised targets, the overall sentiment around PSU stocks may get dampened.
Fiscal: According to the revised estimates of FY22, the Centre's gross and net tax revenues are to grow at 24.1% and 23.8%, respectively, indicating a buoyancy of 1.4 in each case. However, for the budgeted collections for FY23, the buoyancy has been brought down by a factor of 0.9, contrary to the ongoing trends attributed to expanded digitization and formalization of the economy. The Centre's gross tax revenues will have grown more realistically if the under-assessment in tax buoyancy is marginally corrected, thus creating more fiscal space for the government.
In FY23, total expenditure is budgeted to grow by a meagre 4.6%, with budgeted revenue and capital expenditures to increase by 0.9% and 24.5%, respectively. This spells a welcome structural change in government expenditure favouring capital expenditures.
In conclusion, this year's budget is an aberration from the past as even with elections looming around the corner in large states; the central government has denied many ministrations to the populist calls, portraying exemplary resilience. The outcomes of the proposed policy measures and allocations will significantly hinge on their efficient implementation across the state's entire bureaucratic apparatus, which will be observed for the coming times.
About The Author
Niveshak is IIM Shillong's Finance and Investment club. The club has progressively evolved into a strong platform for building a long-standing and mutually beneficial relationship between the corporates and the student community. It manages the Niveshak Investment Fund (NIF), a student-run diversified equity portfolio. The club also organizes finance knowledge sessions, publishes its widely circulated monthly magazine "Niveshak" and hosts competitions that witness participation from B-schools across the country.
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