UNION BUDGET 2023-24:FEW OBSERVATIONS

 Eventhough predictions about forthcoming coming Budget of Union Finance Minister are not warranted,  based on existing j macro economic conditions, external environment and opinions expressed by both official experts and outside economists certain points are highlighted . Currently Indian economy is very critical to the world economy not only as a epicenter of economic growth but also as global firms start to look countries across Asia as part of China +1 strategy  and India is emerging as a clear choice. India combines economic might, a large working age population, demographic dynamism, entrepreneurial energy, robust democracy and diversity. 

   But given the global headwinds and domestic inflationary pressures a modest GDP growth rate of 6-6.5 % is projected for India by experts for the year 2023-24. The budget 2023-24 is to strike a balance between infrastructure investments and welfare schemes while making fiscal consolidation in terms of containing Fiscal deficit from current 6.4% to 5.5-6 %(5.8%) of GDP in 2023-24. Direct Beneficiary Transfer (DBT) scheme has reached rupees 5.14 trillion so far  in the current financial year and the payments will be expected to exceed rupees 6.3 trillion mainly on account of spike in fertilizer subsidies. 

In the forthcoming budget Capital expenditure may be reduced compared to the 2022-23 budget, which has been termed by many as " Capital expenditure carnival" especially in the covid19 background and the necessity to foster high growth. Along with development of 100 smart cities and 20 plus metros,Central Government decided to boost the Capex budget for 2022-23 by a massive 35.4% increase to rupees 7.5 lakh to revive the pandemic affected economy. According to the first advance estimate of National income by the Ministry of Statistics and Programme Implementation Gross Fixed Capital Formation (GFCF) is projected to increase to 11.5 %. Economists observe that State Governments and Private sector need to play a pro active role in capital expenditure depending on their capabilities.Centre will have to devise appropriate incentives to states for infrastructure development rewarding them on the basis of the outcome. However critical infrastructure gap projects identified under the Gati Shakti Mission are yet to be approved largely and funded.

Rupee denominated Green Bond issuance by Indian corporates are expected to pick up in Fy 24.Government has already started issuance of sovereign Green Bonds to set up projects including in renewable energy, clean transportation, water and waste management/ recycling, green buildings, roof top solar, electric vehicles and EV charging infrastructure etc.Green Hydrogen Mission, National Energy Storage Mission etc are expected to provide clean energy and energy security. For energy security. Government is  focusing on building the entire value chain through production Linked Incentive (PLI) scheme.Recent announcement of capital outlay of rupees 19774 crores under the Green Hydrogen Mission and RBI announcement of the issuance of sovereign Green Bonds worth rupees 16000 crores etc to fund Green infrastructure will channel more investment both from public and private players. Finance Ministry is likely to extend PLI scheme to additional sectors including e- bicycle components, garments, toys, high end smartphone components, furniture and leather footwear which could be financed by unutilised amount for the existing PLIs and remaining by additional allocation. With regard  to the challenge of development of  semi conductor sector in India Government has already announced rupees 76000 crores( about $10 billion) subsidies combined with expected matching private investment of $30 billion.A semiconductor integrated circuit (IC) is designed using Electronic Design Automation (EDA) tools.A supply chain for manufacturing IC involves companies that are geographically apart.Eventhouh the design of IC is done entirely in software in which we are relatively competent, whereas in both required investment and appropriate technology we currently remain relatively underdeveloped . Similarly experts opine that crypto currencies or Virtual Digital Assets (VDA) regulation should  be streamlined and monitor that crypto exchanges adhere to KYC and money laundering principles and publish proof of reserves.Despite crash in crypto prices and collapse of Crypto exchange, investors are still fascinated by potential tech firms and block chain technology of crypto assets 

Eventhough much changes in personal income tax may not be forthcoming, some respite to low and medium tax payers which are due since 2015 along with the current inflationary pressures, are wished by many. Since employment generation is the most critical issue, support and incentives to Micro Small and Medium Enterprises (MSMES) should continue despite their outstanding debts. As a result of existing financial stability and resilience of the financial sector recent turmoil in the corporate sector due to crony capiltalistic tendencies coupled with  discretionary attitude of regulatory bodies need to Lbe checked.However due  to less exposure and financial strength of the economy it may not  impact much . In short a growth oriented infrastructure intensive budget with PLI incentives for  manufacturing and  startups, relief to middle class and more  welfare measures for poor  are expected.