Govt to achieve FY23 fiscal deficit target of 6.4%

The Gross Domestic Product (GDP) is poised to be within reach in the current financial year, despite possible variations in revenues and expenditures from revised estimates

March 20, 2023

A 6.5% economic growth in the coming year is possible

The revised capital expenditure (Capex) target of INR 7.3 trillion will be met in FY23

The net tax revenue target was raised by 8% to INR 20.87 trillion in FY23 revised estimates (RE)

Falling crude oil prices will benefit the economy, as India is a major importer of crude, natural gas, and fertilizers, which could reduce the cost of industry

Indian economy shows signs of post-pandemic recovery

The Indian government is expected to achieve the targeted fiscal deficit of 6.4% of the GDP in the current financial year, despite possible variations in revenues and expenditures from revised estimates, according to Ajay Seth,  Economic Affairs Secretary. 

Seth believes that a 6.5% economic growth in the coming year is likely and manageable, despite potential adverse impacts from geopolitical challenges, thanks to strong Forex reserves.

Regarding the possibility of a modest slippage from the fiscal deficit target due to a potential shortfall in tax revenues, Seth says that there will always be some variations under some heads with such a large budget. However, he believes that the revised Capex target of INR 7.3 trillion will be met in FY23.

Seth also suggests that most ministries will reach the Revised Estimate (RE) levels, and the net tax revenue target was raised by 8% to INR 20.87 trillion in FY23 RE. He acknowledges that there may be a modest deviation from the RE level of INR 17.55 trillion due to supplementary spending captured in the RE of FY23.

In terms of economic growth, Seth expects it to be around 7% this year, with a range of 6-6.8% next year, although 6.5% appears to be reasonable. He notes that falling crude oil prices will benefit the economy, as India is a major importer of crude, natural gas, and fertilizers, which could reduce the cost of industry and lower subsidy bills. However, analysts warn that a further global slowdown could hit India’s exports and economic growth.

Source: Financial Express

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