Budget 2023 Expectations: India is seen to slow to 6.5 per cent in the fiscal year starting April but will remain the fastest growing major economy in the world as it fared better in dealing with the extraordinary set of challenges the world faced, the Economic Survey 2022-23 tabled on Tuesday said. The survey sees GDP growth of 6.5 per cent in 2023-24 compared with an estimated 7 per cent expansion this fiscal (April 2022 to March 2023) and 8.7 per cent in the previous year.
Key highlights
-- Economy to grow 6.5 pc in 2023-24, compared to 7 pc this fiscal and 8.7 pc in 2021-22
-- India to remain the fastest growing major economy in the world
--- GDP in nominal terms to be 11 percent next fiscal
-- Growth driven by private consumption, higher capex, strengthening corporate balance sheet, credit growth to small businesses and return of migrant workers to cities
- Economy has "recouped" what was lost, "renewed" what had paused, and "reenergised" what had slowed during the pandemic and since the conflict in Europe
-- Real GDP growth to be in the range of 6-6.8 pc next fiscal depending on global economic, political developments
-- RBI projection of 6.8 pc inflation this fiscal outside the upper target limit, not high enough to deter private consumption, also not too low to weaken inducement to invest
--Challenge to rupee depreciation persists with the likelihood of further interest rate hikes by the US Fed
--CAD may continue to widen as global commodity prices remain elevated, economic growth momentum stays strong
--If CAD widens further, rupee may come under depreciation pressure
--Overall external situation to remain manageable
--India has sufficient forex reserves to finance CAD and intervene in forex market to manage rupee volatility
--Elevated downside risks to global economic outlook as inflation persisting in advanced economies and hints of further rate hikes by central banks
--Inflation did not "creep too far above" tolerance range compared to several advanced nations
--The growth in exports has moderated in second half of current fiscal; the surge in growth rate in 2021-22 and first half of current fiscal led to production processes shifting gears from 'mild acceleration' to 'cruise mode'
--Slowing world growth, shrinking global trade led to loss of export stimulus in the second half of current year
--Schemes like PM KISAN, PM Garib Kalyan Yojana significantly contributed to lessening impoverishment
--Credit disbursal, capital investment cycle, expansion of public digital platform and schemes like PLI, National Logistics Policy and PM Gati Shakti to drive economic growth
--Bank credit growth likely to be brisk in FY24 on back of benign inflation, moderate credit cost
--Credit growth to small businesses remarkably high at over 30.5 pc in January-November, 2022
--Housing prices firming up after release of pent-up demand, decline in inventories
--Central govt capex grew 63.4 pc in April-November of current fiscal
--India's economic resilience has helped it withstand the challenge of mitigating external imbalances caused by the Russia-Ukraine conflict without losing growth momentum
--Stock market gave positive returns in calendar year 2022 unfazed by FPI withdrawal
--Private consumption, capital formation led economic growth in current fiscal has helped generate employment; urban employment rate declined, while Employee Provident Fund registration rose.
Economic Survey: Full coverage
The live blog session has concluded. Stay tuned to Moneycontrol's coverage of the Union Budget 2023
'Seeds of potential fiscal slippage': What Nomura said on Economic Survey 2023
Financial holding firm Nomura said the optmistic growth outlook in India's Economic Survey 2023 carries "seeds of potential fiscal slippage".
"The Economic Survey, released as a precursor to the FY24 Union Budget, provided a particularly optimistic growth outlook, while emphasising the need to continue to focus on capex and fiscal consolidation. We believe that over-optimism on growth may limit the extent of potential expenditure consolidation and boost revenue projections in the FY24 Budget. This in turn would make it difficult for the government to fiscally ‘walk the walk’ if growth prospects disappoint, as we expect," it said.
Lacking judicial infrastructure reason for 40 million pending cases
The National Judicial Data Grid (NJDG), a database maintained by the Ministry of Law and Justice, shows that over 40 million cases are pending in India's district and subordinate courts. The database also reveals that lack of proper infrastructure is one of the main reasons for the backlog. Infrastructure includes technological aids to smooth operations of the courts, an increase in the number of courtrooms and an increase in the number of judges.
Govt collects second-highest mop-up ever of GST in January
The government collected Rs 1.56 lakh crore in Goods and Services Tax (GST) in January 2023. The figure was second only to the record Rs 1.68 lakh crore collected in April 2022, and it was up 10.6% from the first month of 2022 and 4.3% higher than December 2022.The GST collection numbers for January come just over 12 hours before Finance Minister Nirmala Sitharaman presents the 2023-24 Union Budget in Parliament at 11 am on February 1.The Centre expects to assume a nominal GDP growth rate of 10.5-11 percent for 2023-24, sharply lower than the 15.4 percent growth for this year.
Economic survey states a decline in capital expenditure on housing and urban affairs
According to the Economic Survey 2023, capital expenditure on housing and urban affairs declined by 32.47 percent in the first eight months of the financial year 2022-2023.During the financial year 2022-2023, housing and urban affairs have been allocated Rs 11,000 crore (April-November 2022) as against Rs 17,000 crore in the same period last year. The budgeted capex estimate is Rs 27,000 crore for the entire 2022-2023 financial year.
Key tech and startup highlights from the Economic Survey
- Homecoming of Indian startups: Amid a spate of startup layoffs, the Survey said that direct jobs in the country’s startups jumped 36 percent to 269,000 last year.The number of recognised startups in the country has increased from 452 in 2016 to 84,012 in 2022.
-Digital Public Goods find pride of place: While presenting the Economic Survey today, Nageswaran said that India's digital public infrastructure (DPI) can add around 100 basis points to the GDP growth rate.UPI accounted for 52% of India's total digital transactions in FY22
-Tackling policy challenges from new tech:Not just internet users and citizens, these legislations are also expected to create an impact on nascent, emerging technologies such as drones and the space tech sector.
Economic survey mentions initiatives to sensitise the population towards a healthy lifestyle
Thesection titled growth magnets in this decade notes that going forwardthere will be strategies to arrest and reverse the rising obesity levels, and manage diabetes among other growth concerns to better the quality of life.
FDI into manufacturing sector slows in first half of FY23
“Notwithstanding an overall drop in FDI in the first half of FY23, inflows have stayed above the pre-pandemic levels, driven by structural reforms and measures improving the ease of doing business,” the Survey says.The government has implemented an investor-friendly FDI policy under which FDI up to 100 percent is permitted through automatic route in most sectors.
Survey forecasts of GDP growth feel out of reach
The Economic Survey for 2022-23 predicts a real GDP growth rate of 6.5 percent for the next financial year, in a range of 6-6.8 percent. However, the forecast seems optimistic by comparison to other economic surveys made over the last few years; in fact, if one looks at the growth forecasts made by previous Economic Surveys, they also seem out of reach.
What the Economic Survey says about EVs
The Economic Survey of India has highlighted that the Indian auto industry is vital to transitioning to a green economy. By 2030, one crore EVs will be sold annually in India, with the domestic EV market growing at an average annual pace of 49% between 2022-2030. The survey cited government programs such as Faster Adoption and Manufacturing of Electric Vehicles (FAME) and Production Linked Incentive schemes, but was silent on the challenges facing the EV segment.
Chief Economic Advisor V Anantha Nageswaran's optimism is contagious
India’s macroeconomic parameters are good and are expected to remain so. The country will now begin to see the full beneficial effect of reforms that the government has taken over the past years. These are two points that Chief Economic Advisor V Anantha Nageswaran wants to drive home through his new economic survey of 2023.From the CEA comes #WhyIamNotLosingHopeinIndia
Economic survey points out the key to realise India’s potential
The document stressed on the need to harness Nari Shakti (women power), education and skilling. It said there was a need to dismantle LIC – licence, inspection and compliance; provide affordable, reliable and viable power supply; and ensure energy security and energy transition for India to fully realise its potential.
Focus is on overall economy, not elections, says MoS Finance
The focus of the Union Budget 2023-24 will be on the "overall economy", and not on the upcoming elections, said MoS Finance Pankaj Chaudhary, a day ahead of the release of the budget document. Nine crucial assembly elections are to be held this year, followed by the general elections in 2024. Expectations are rife that the government may increase capital expenditure, as this would be the final full-year budget of the Narendra Modi-led government before it seeks re-election.
"As far as budget is concerned in view of elections, elections keep coming and going, but how to improve the economic condition of the people of the country, Hon'ble Modi ji's attention is always there and it will be seen in this budget also," news agency ANI quoted Chaudhary as saying.
Reactions to Economic Survey 2023
Here's how some of the experts reacted to the Economic Survey 2023.
LakshmiIyer, CEO-investment advisory,KotakInvestment Advisors
“ All eyes are now on the budget, which could determine the trajectory of growth as well as the direction of interest rates, given the borrowingprogrammethat will be announced tomorrow. Key to watch will be the gross borrowing numbers, which we estimate should be Rs 16 lakh crore.”
Vinod Nair, head of research at Geojit Financial Services
“The Economic Survey is optimistic that India will continue to grow at a healthy rate in the medium term, led by consumption and capital expenditure... For the budget, it is going to be a challenge in FY24 to plan out expenditure due to a short-term slowdown in the economy, high core inflation, and fiscal deficit.”
Economic Survey on coal production
The coal production for FY23 will increase about 17 per cent higher than the previous year, and hit 911 million tonnes.“Further, the coal stock at power plants improved to 12 days as of December 2022, compared to 10 days (of stock) as on June 30, 2022, and eight days a year ago,” says the survey.
India becomes favourable investment destination for renewables
Since 2016, India has invested close to or above $10 billion in renewable energy every year, according to the Economic Survey 2022-23 tabled in Parliament.“India is progressively becoming a favoured destination for investment in renewables,” The survey document said.
Economic Survey on the space sector
According to the economic survey, acomparison of April-November 2022 with the same period in 2021 shows a nearly 50 percent decline in government capital expenditures in the space sector.In April-November 2021, the Centre's capital expenditure was 40,000 crore, whereas it was 20,000 crore in 2022, representing a 48.74 percent decrease.
Economic Survey about PLI schemes
The survey states that the production-linked incentive (PLI) scheme will likelyattract a capex of approximately ₹3 lakh crore over the next five years. The Survey feels that “It has the potential to generate employment for over 60 lakh in India and increase the share of the manufacturing sector in total capital formation, which currently stands at around 17-20 percent between FY12 and FY20”.
Economic Survey says that Inflation will continue to be sticky and authorities will remain vigilant and proactive in the inflation fight.
What Economic Survey says about consumption:
Consumption story will only get better, says the Economic Survey. “With world commodity prices now also on a downward trajectory and showing up in declining rates of India’s wholesale inflation, core retail inflation is expected to relent, making domestic consumption demand much stronger to further induce industrial growth in the country.”
Some good news for Banks if this happens
Banks may see brisk growth in credit offtake this fiscal if inflation eases in 2024 and the real cost of credit does not rise, according to the Economic Survey. The increase in the overall bank credit has also been influenced by a shift in borrower’s funding choices from volatile bond markets, where yields have increased, and external commercial borrowings, where interest and hedging costs have increased towards banks, the survey showed.
Growth for India next year
The real growth forecast for next year, as per the Economic Survey, is higher than estimates of most economists from outside the government. Many said the economy will slow down next year on account of domestic demand being hit by the Reserve Bank of India's (RBI) 225 basis points worth of repo rate hikes in 2022 to bring down elevated inflation levels.
Railway Budget 2023 expectations live: More outlays for railways
This year, the FM may underscore an outlay of Rs 2 lakh crore as a combination of both budgetary support and borrowings by central public sector enterprises. More nationally important projects may be announced to meet the medium-term National Rail Plan targets of carrying 50 percent cargo, up from the current share of 30 percent.
Budget capital gains tax expectations:
Our survey says a chunk of market participants are of the view that there will be no change in capital gains tax.
President Murmu on India's manufacturing capacity
-- Manufacturing is on the rise, international manufacturers are coming to India
--India is heading towards manufacturing of semi-conductors, airplane parts
-- Imports of toys have fallen 70%, exports are up over 60%
-- Over 70% decrease in import of toys in India
-- Govt efforts have led to defence exports rising 6 times
-- India has become global manufacturing hub for mobile phones and parts
Economic survey over the years
President Murmu live: Over 50% of the beneficiaries of Ayushman Yojna are women
President Murmu live: 36,000 Adivasi families have been covered under Adivasi Ekta Mission
President Murmu live: My government has fulfilled the aspirations of the poor, dalit, backward and the adivasis.
President Murmu live: Centre is working on giving assistance to small farmers. It has spent more Rs 2.5 crore under PM Kissan Scheme
President Murmu live: Through Ayushman Yojna we saved many people to going into poverty and saved 80,000 cr
What President Murmu said in her Budget address
-- Corruption is the biggest enemy of masses
-- Govt e-marketplace has seen transactions worth over Rs 3 lakh crore
--- Taxpayers are getting refunds within days of filing IT returns
President Murmu live: India now has a government that is willing to face problems head on
President's Budget speech: India no longer depends on other countries to solve its issues, rather other countries are looking at India to help them out with their problems
PM Modi says world's eyes on India's Budget
Significant voices in the world are giving positive signals, Prime Minister Narendra Modi said in his Budget address. "It has been a tradition in the Parliament that when a new MP speaks for the first time, the entire Parliaments gives them respect and creates an atmosphere to give them confidence. Similarly, today's address is a first by the President," he said.
The PM said not just India, but the entire world is keeping an eye on our budget.
"We have only one thought, the country comes first. In the budget session, we will wrangle and discuss as well. We will have a very good discussion on every issue in the House. All MPs will participate in this session with full preparation."
Budget 2023 expections from real estate sector
Real estate industry wants changes in Affordable Rental Housing Complex scheme that aims to provide affordable housing to urban poor and migrant worker communities. Read what they expect
Budget 2023 tax expectations updates:
All eyes are on the FM for a specific structure for the taxation of capital gains, dividends, and capital market transactions and create incentives for financial asset investments.
Tax exemption on personal loans?
Experts feel Budget may have something on this. Study and personal loans account for a significant portion of the lending market. There is no tax exemption or incentive for personal loans. Allowances of Rs 100 a month for child education and Rs 300 per month for hostel expenses (up to a maximum of two children) may be rationally enhanced.
Let's get Fiscal: The room for FM to play in Budget
Stopping PMGKAY and the concurrent provision of free foodgrains under the NFSA for 1 year gives a fiscal saving of close to Rs 1 tn in FY24. Budget 2023-24 may switch revenue expenditure composition, by enhancing outlay towards more productive rural schemes such as NREGS, PM Awas Yojana – Gramin, PM Gramin Sadak Yojana – begetter of asset creation, jobs and incomes for rural India.
Budget 2023 expectations live updates: Infrastructure status for realty
A move like this in Budget 2023 can help create long-term funding for large-scale projects. This will also help avail long-term cheap credit to deliver affordable projects. According to ANAROCK's Consumer Sentiment Survey, demand for affordable housing fell precariously last year. In 2018, nearly 39 percent property seekers in the top 7 Indian cities were keen on affordable homes priced within Rs 40 lakh. This demand shrunk to 26 percent
More outlays for railways
This year, the FM may underscore an outlay of Rs 2 lakh crore as a combination of both budgetary support and borrowings by central public sector enterprises. More nationally important projects may be announced to meet the medium-term National Rail Plan targets of carrying 50 percent cargo, up from the current share of 30 percent.
Union Budget live updates: What homebuyers want
Gain on property held for more than 2 years prior to the date of sale is considered long-term and is taxable at the rate of 20 percent. In case of the sale of listed shares, the prescribed holding period for long-term capital gain is 1 year and the applicable tax rate is 10 percent. The FM can try to bring taxability of gain on the sale of property at par with that of listed shares.
Insurance sector's expectations from Budget 2023:
A separate deduction for life insurance premiums under section 80C. Also, pension gets taxed as income.
What will Budget 2023 focus on the most?
Budget 2023 will prioritize macro-economic challenges over growth and focus on providing a credible fiscal consolidation roadmap, says Pranjul Bhandari, chief India economist at HSBC Holding Plc. High inflation and widening trade deficit that posed macroeconomic stability challenges last year will lessen in severity, but growth will taper off too, Bhandari said.
Your home loans may pinch post Budget
The RBI’s next monetary policy is scheduled for February 8.
The Monetary Policy Committee (MPC) had increased the repo rate by 225 basis points in 2022 to 6.25 percent. One basis point is one-hundredth of a percent point. The consecutive rate hikes were to control the rising inflation.
Economists expect the RBI may hike the repo rate by another 25 or 35 basis points in its February policy before taking a pause.
If there is another rate hike, banks will once again increase interest on home loans and other loans linked to the repo rate as an external benchmark, as per the terms of loan agreements.
Budget 2023 Expectations Live:
February 1 may see callouts road safety, highway amenities, including provision of charging stations for EVs. Monetisation of road assets will continue to be the theme this year with some stiff targets being placed.
Budget 2023 expectations live: Tax relief for you, more sops for poor
The FM is seen tweaking income-tax slabs to provide relief to the middle class and increase spend on the poor through schemes such as rural jobs, while ramping up incentives for local manufacturing. Social welfare schemes may get allocation, says India Ratings & Research Pvt. economist Devendra Kumar Pant adding that inflation has eroded spending power and relief in tax can be expected to boost consumption
IMF on India's growth before Budget 2023
A day before Nirmala Sitharaman presents the Union Budget for 2023-24, the IMF in a report said India will slow down next year, but will subsequently pick up pace. IMF sees growth in India dipping 6.8 percent in 2022-23 to 6.1 percent in 2023-24 before picking up to 6.8 percent in 2024-25, with resilient domestic demand despite external headwinds
Budget 2023 Expectations Live:
February 1 may see callouts road safety, highway amenities, including provision of charging stations for EVs. Monetisation of road assets will continue to be the theme this year with some stiff targets being placed.
Budget 2023 Expectations Live Updates: Focus on Bharat
Inflation monster: Hindustan Unilever in a recent report highlighted the dip in rural FMCG volumes, which was way higher than urban markets for three straight quarters. Inflation is one main reason clubbed with slowdown in non-agricultural sources of rural income. Real rural wage growth too has been under pressure due to inflation.
Slowing demand: As inflation softens, expectation is that consumption could kick off. Prices of soaps have been lowered to pass on benefits of lower palm oil prices. If other products also turn cheaper this Budget, it could help revive consumption.The onus is now onthe FM if she retains focus on capital investments or decides to give bigger boost to consumption to drive growth.
