Budget 2023 can announce measures to curtail increasing CAD: Sources

The country's current account deficit has ballooned over the last year amid the surge in commodity prices following the outbreak of the war in Ukraine. (Representative image)

The upcoming Union Budget 2023-2024 can announce measures to curtail India's increasing current account deficit (CAD), CNBC-TV18 reported on January 9 citing sources.

The Finance Ministry is in talks with commerce, petroleum, fertiliser and pharma ministries on steps to cut CAD, the sources added.

Official data released in December showed India’s current account deficit widened to $36.4 billion or 4.4 of GDP in the third quarter of 2022, from $18.2 billion or 2.2 percent of GDP in the second quarter.

However, it may narrow down a bit in 2023 as commodity prices ease and domestic demand comes off the boil, according to Capital Economics.

The country's CAD has ballooned over the last year amid the surge in commodity prices following the outbreak of the Russia-Ukraine war. There are concerns that the gap may remain wide given that exports are slowing amid recession in the West.

Further, the sources also added that government is also discussing to discourage imports of 'non-essential" items across sectors, as well as, hike in import duties where needed. It is also focusing on crackdown on imports circumventing country of origin norms, according to the report.

In terms of fertiliser imports, the Centre is mulling ways to ensure cheaper imports. It is also discussing a possible expansion of its Product-Linked Initiative (PLI) schemes, among other things.

The Parliament's budget session is likely to commence on January 31, with Finance Minister Nirmala Sitharaman slated to present the Union Budget on February 1. The session is expected to conclude on April 6 with a recess in between.

The Economic Survey will also be tabled in both Houses on the first day of the budget session.

Sitharaman recently indicated that her forthcoming Budget will continue to push growth on the back of public spending as she said it will "follow the spirit" of earlier Budgets. The finance minister had unveiled a massive public spending programme to support the economy, emerging out of the COVID-19 pandemic.

The Budget 2023-24 will be presented against the backdrop of many institutions, including the Reserve Bank of India (RBI), slashing India's growth forecast to 6.8 percent or so for the current fiscal.

The RBI projected the real GDP growth for 2022-23 at 6.8 percent, with the third quarter at 4.4 percent and the fourth at 4.2 percent.

Gross Domestic Product (GDP) growth is projected at 7.1 percent for the April-June period of 2023-24 and at 5.9 percent for the following quarter.