Budget 2023: Here is what experts want from the finance minister

The Union Budget is an important document that outlines the government’s plans for the upcoming fiscal year in terms of revenue and expenditure. It is widely watched by economists, businesses, and investors as it provides insight into the government’s economic policies and priorities. The budget is expected to reflect the government’s efforts to revive the Indian economy, which has been affected by a number of factors including the COVID-19 pandemic and the global recession brought by ongoing war between Ukraine and Russia.

Financial experts as the stakeholders of the economic growth of the nation do have their own take on the expectations from the financial statement. Here is what the experts are expecting from the Union Budget for FY24-

Vincent K A, Research analyst at Geojit Financial Services is anticipating a budget that will be farmer friendly and focus more on rural economy and market.

He said, “The need of the hour is to support farmers due to elevated inflation, and hence there is a high expectation of a higher allocation for rural development in this budget. The allocation for FY23 was Rs.1.35 trillion, but it has already been spent Rs.1.55 trillion. Rural demand is important for overall growth, as rural India accounts for about 65% of the population. Being a pre-election budget, the usual contemplation is that it will be populist.”

Vincent also stated that more funds are expected to be channelised towards government’s rural development schemes like MSP (Minimum Support Price), Ujjwala and Saubhagya Yojana to boost credit growth in the villages.

“We can expect measures like increasing MSP (Minimum Support Prices), expansion of warehousing, micro irrigation, and credit growth, increasing the revenue of the rural market. Other instruments we can expect is an increase in the allocation of schemes like Prime Minister Awas, Ujjwala and Saubhagya Yojana schemes, indirectly improving the standard of rural economy”, he added.

 As far as taxation is concerned, Vincent does not expect any changes in GST rates but he is positive about steps to rationalise tax slabs or an increase in tax exemption which would be a good sign for FMCG/Retail companies by as it would increase the disposable income in the hanfds of consumers.

Nikhil Kamath, Co-founder of Zerodha and True Beacon also spoke on similar lines as Vincent on investments in rural economy admitting the fact that there will be an impact of the upcoming general elections on the union Budget.

Kamath said, “In the upcoming budget, the government is likely to focus on Capex spending with a potential double-digit spending growth, especially given that next year is the general election, and the rural economy is facing challenges.”

As for taxation he said, “The markets expect some tax relaxations, especially for the salaried class, but with the anticipated focus on Capex spending, the tax relaxations are less likely.”

Kamath also looked on to the broader macreconomic picture with respect to the nominal GDP growth and fiscal deficit. Taking the last budget into account he asserted, according to the then-predicted growth rate of 11.1% for the nominal GDP, the previous union budget set the fiscal deficit for 2022–2023 at INR 16.6 trillion, or roughly 6.4% of GDP. According to current advance projections, the nominal GDP growth in FY23 is anticipated to expand at a rate of 15.4%; this would help maintain the budget deficit under the goal levels and provide some breathing room.

Apart from the macroeconomic picture and the political influnces on the budget, the Zerodha co-founder also mentioned the expectations the market participants are putting from the budget given the global economic uncertainties. 

He said, “Given that the budget comes at the cusp of an uncertain environment with concerns about global growth and inflationary pressures, the market participants are expecting the government to focus on the objective of giving impetus to investments and simplifying the tax laws on capital gains.”

Ashwin Patil, Senior Research Analyst at LKP Securities gave different dimension of the budget expectations with respect to the government’s aim towards ‘Aatmnirbharta’ (indigenisation) in defence sector and focus on research and development within the field.

Patil said, “Defence sector, as every year before the budget has a wishlist out of which the important one is outlay for emphasis on indigenisation, which means emphasis on local production. The GOI definitely does a lot for the sector every year, also on the R&D side where they plan to spend a substantial amount. Therefore even this year we expect them to announce a significant budget for the space and research, electronic equipments and advancement on further localization.”

Patil also praised the government’s Production Linked Incentive (PLI) scheme in the sector of defence and expected its influence in the sector of Space research too.

“GOI (Government of India) is fostering healthy competition in the defence space through launching various PLI schemes. This would surely improve the quality of defence products and services and further enhance the defence sector. Also the country needs to improve on their space research, due to which we believe that further PLI schemes will be more focused on Space research”, he said.