The 2023-24 Union Budget, presented on February 1, may have blown some expectations out of the water, but it had to adhere to one basic principle: fiscal arithmetic and discipline. After all, the government cannot spend its way to bankruptcy.
The total size of the 2023-24 Budget stood at Rs 45.03 lakh crore - a 7.5 percent jump over the revised estimate for 2022-23 - and to help meet the gap between its income and expenditure, the Centre will borrow a record Rs 15.43 lakh crore from the market through the issuance of bonds.
On a net basis, the borrowing programme has been estimated at Rs 11.81 lakh crore.
The market borrowing will be the major route to bridge the fiscal deficit of Rs 17.87 lakh crore for the next year, 1.8 percent higher than the revised estimate of Rs 17.55 lakh crore. As a percentage of GDP, the fiscal deficit target for the next year has been set at 5.9 percent. With Finance Minister Nirmala Sitharaman saying that this year's target of 6.4 percent will be met, a reduction of 50 basis points is along market expectations.
One basis point is one-hundredth of a percentage point.
"In my Budget Speech for 2021-22, I had announced that we plan to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5 percent by 2025-26 with a fairly steady decline over the period. We have adhered to this path, and I reiterate my intention to bring the fiscal deficit below 4.5 percent of GDP by 2025-26," Sitharaman said in her Budget speech on February 1.
| 2023-24 BUDGET'S KEY NUMBERS (in Rs lakh crore) | |||
| FY24 BE | FY23 RE | % CHANGE | |
| Fiscal deficit | 17.87 | 17.55 | 1.8% |
| Gross market borrowing | 15.43 | 14.21 | 8.6% |
| Net market borrowing | 11.81 | 11.08 | 6.6% |
| Revenue deficit | 8.70 | 11.11 | -21.7% |
| Total receipts | 45.03 | 41.87 | 7.5% |
| Gross tax revenue | 33.61 | 30.43 | 10.4% |
| Non-tax revenue | 3.02 | 2.62 | 15.2% |
| Total expenditure | 45.03 | 41.87 | 7.5% |
| Revenue spend | 35.02 | 34.59 | 1.2% |
| Capital spend | 10.01 | 7.28 | 37.4% |
On the expenditure side, capital expenditure remained the dominant force.
At Rs 10.01 lakh crore, the Centre's capex target for next year is 37.4 percent higher than the revised estimate for this year. Next year will also see states get Rs 1.3 lakh crore as 50-year, interest-free loans - 30 percent more than this year.
"The Budget recognised that it would have to continue playing the lead role in driving investments in the economy, given the rising global risks and only a nascent recovery in the private capex cycle," said Abheek Barua, HDFC Bank's chief economist.
According to Madhavi Arora, lead economist at Emkay Global Financial Services, once the capex of public enterprises is included, the growth in capex is 32 percent to Rs 14.89 lakh crore.
On the receipts front, there is quite a bit of movement.
The Centre estimates that its gross tax collections will rise to Rs 33.61 lakh crore in 2023-24, up 10.4 percent from the revised estimate for this year.
Within taxes, corporate and income tax collections are both seen rising 10.5 percent on-year to Rs 9.23 lakh crore and Rs 9.01 lakh crore.
Excise duty collections are pegged at 5.9 percent above this year's revised estimate at Rs 3.39 lakh crore. The Centre's Goods and Services Tax collections, meanwhile, are seen rising 12 percent to Rs 9.57 lakh crore.
| REVENUE BREAK-UP | |||
| FY24 BE | FY23 RE | % CHANGE | |
| Gross tax revenue | 33.61 | 30.43 | 10.4% |
| Corporation tax | 9.23 | 8.35 | 10.5% |
| Income tax | 9.01 | 8.15 | 10.5% |
| Customs | 2.33 | 2.10 | 11.0% |
| Excise | 3.39 | 3.20 | 5.9% |
| Central GST | 9.57 | 8.54 | 12.0% |
| Non-tax revenue | 3.02 | 2.62 | 15.2% |
| RBI, PSU bank dividend | 0.48 | 0.41 | 17.2% |
| Disinvestment | 0.51 | 0.50 | 2.0% |
Non-tax revenue for the next financial year has been pegged at Rs 3.02 lakh crore, up 15.2 percent.
The two key components of non-tax revenue are disinvestments and dividends from the Reserve Bank of India (RBI) and public sector banks. While the former has been pegged at Rs 51,000 crore, the central and public sector banks are expected to give a dividend of Rs 48,000 crore next year.
Both these sub-heads have seen some moderation. Dividend from the RBI, for instance, is set to take a hit on account of the marked-to-market losses the central bank will have to provide against its investments in foreign securities for 2022-23. However, it will also make a bumper profit from the massive foreign exchange sales it has conducted this year while defending the rupee's exchange rate.
On the whole, there is no denying a delicate balance has been struck by Sitharaman. But the proof of the pudding is in its eating. Only time will tell if these numbers pan out as per the finance ministry's expectations.
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