Moneycontrol

Budget 2023Budget 2023

PARTNERS

  • Tata AIA Life Insurance
  • Hafele
  • Motilal Oswal
Live Now : Nifty Banker 3.0 | India's First Retail Index Traders Online Conference.
Budget 2023
Budget 2023

Budget 2023: Centre may fix FY24 fiscal deficit target at 5.9% of GDP, borrow Rs 15.5 lakh crore

The central government may continue to tread the path of gradual fiscal consolidation and lower the deficit by 50 basis points, say economists.

January 25, 2023 / 11:00 AM IST
Finance Minister Nirmala Sitharaman will present Budget 2023 on February 1.

Finance Minister Nirmala Sitharaman will present Budget 2023 on February 1.

Finance Minister Nirmala Sitharaman is expected to set a fiscal deficit target of 5.9 percent of gross domestic product (GDP) in the budget for 2023-24 she will unveil on February 1.

According to a Moneycontrol poll of 17 economists, the Centre will next year continue to move towards its medium-term deficit target of 4.5 percent by 2025-26 in a gradual manner even as it ensures support for growth remains.

"On one hand, growth momentum will need to get continued support from fiscal levers, particularly with a severe global recession looming on the horizon, but at the same time there would be expectations for the government to aim for a modest fiscal consolidation, so as to not crowd out private investments and to be able to bring down the Centre's fiscal deficit target to 4.5 percent of GDP by 2025-26, as per the proposed glide path," said Kaushik Das, Deutsche Bank's chief economist for India and South Asia.

ORGANISATIONESTIMATE FOR FY24 FISCAL DEFICIT TARGET
Motilal Oswal Financial Services5.7%
Barclays5.8%
ICRA5.8%
Bank of Baroda5.8%
HDFC Bank5.8%
Quantum Mutual Fund5.8%
QuantEco Research5.8%
Emkay Global Financial Services5.8%
DBS Bank5.9%
Goldman Sachs5.9%
YES Bank5.9%
IDFC First Bank5.9%
Nomura5.9%
Standard Chartered Bank5.9%
Morgan Stanley5.9%
Deutsche Bank6.0%
State Bank of India6.0%

"A delicate balance will need to be maintained to achieve the multiple objectives, but one should not expect the budget to be a panacea for all the economic problems, as many policy decisions may be announced outside the budget, as has been the case in the past," Das added.

India is expected to clock a growth rate of 7 percent in 2022-23, but economists are predicting a sharp downtrend in 2023-24, with some forecasting a fall in GDP growth to as low as 5.1 percent – 140 basis points below the Reserve Bank of India's (RBI) number of 6.5 percent.

One basis point is one-hundredth of a percentage point.

On a net basis, the market borrowing is seen at Rs 11.7 lakh crore.

ORGANISTIONESTIMATE FOR FY24 MARKET BORROWING (in Rs lakh crore)
GROSSNET
ICRA14.810.4
Emkay Global Financial Services15.1512.0
QuantEco Research15.3511.0
YES Bank15.411.7
DBS Bank15.511.1
IDFC First Bank15.511.76
Nomura15.511.1
Morgan Stanley16.111.7
State Bank of India16.111.7
Quantum Mutual Fund16.412.0
Bank of Baroda16.5-17.012.0-12.5
Goldman Sachs16.812.9
Standard Chartered Bank16.813.1

Government borrowing is a key determinant of interest rates as a higher-than-expected number can exert upward pressure on borrowing rates for all bond issuers.