Hopes were pinned on Budget 2022 to turn the wobbly Indian economy battered by the pandemic back on the growth track. While it is important to understand the government's intent behind policy measures, the best indicators of the economic issues are the underlying numbers.
The Centre's ability to spend in FY23 is determined by the extent of fiscal consolidation it looks to achieve. A fiscal deficit target of 6.4 percent of the Gross Domestic Product (GDP), or Rs 16.61 lakh crore, seems to provide plenty of room to keep the spending pedal pressed.
A pre-Budget Moneycontrol survey pegged the fiscal deficit target for FY23 at 6.1 percent of the GDP.
| FY23 BE (Rs lakh crore) | FY22 RE (Rs lakh crore) | FY23 BE vs FY22 RE | |
| Fiscal deficit | 16.61 | 15.91 | 4.4% |
| Gross market borrowing | 14.95 | 10.47 | 42.9% |
| Net market borrowing | 11.19 | 7.76 | 44.2% |
| Revenue deficit | 9.90 | 10.88 | -9.0% |
| Total receipts | 39.45 | 37.70 | 4.6% |
| Gross tax revenue | 27.58 | 25.16 | 9.6% |
| Non-tax revenue | 2.70 | 3.14 | -14.1% |
| Total expenditure | 39.45 | 37.70 | 4.6% |
| Revenue spend | 31.95 | 31.67 | 0.9% |
| Capital spend | 7.50 | 6.03 | 24.5% |
The Budget's assumption of nominal GDP growth of 11.1 percent for FY23 is significantly lower than the expectations of a 12.8 percent growth reflected in another pre-Budget survey by Moneycontrol.
To meet the fiscal deficit of Rs 16.61 lakh crore, the Centre plans to borrow Rs 14.95 lakh crore from the market on a gross basis and a net Rs 11.19 lakh crore.
In terms of revenue, the Centre estimates that its gross tax collections will rise to Rs 27.58 lakh crore in FY23, up 9.6 percent from the revised estimate for FY22. Non-tax revenue for the next financial year has been pegged at Rs 2.70 lakh crore, down 14.1 percent.
| FY23 BE (Rs lakh crore) | FY22 RE (Rs lakh crore) | FY23 BE vs FY22 RE | |
| Gross tax revenue | 27.58 | 25.16 | 9.6% |
| Corporation tax | 7.20 | 6.35 | 13.4% |
| Income tax | 7.00 | 6.15 | 13.8% |
| Customs | 2.13 | 1.89 | 12.7% |
| Excise | 3.35 | 3.94 | -15.0% |
| Central GST | 6.60 | 5.70 | 15.8% |
| Non-tax revenue | 2.70 | 3.14 | -14.1% |
| RBI, PSU bank dividend | 0.74 | 1.01 | -27.0% |
| Disinvestment | 0.65 | 0.78 | -16.7% |
Within taxes, corporate tax collections are seen rising 13.4 percent year-on-year to Rs 7.20 lakh crore in FY23. Income tax collections have been estimated at Rs 7 lakh crore, up 13.8 percent from the revised estimate for FY22.
Excise duty collections are seen 15 percent lower at Rs 3.35 lakh crore following the cut in excise duty on petrol and diesel in November 2021. The estimate for excise mop-up for FY22 has been revised to Rs 3.94 lakh crore from Rs 3.35 lakh crore.
One of the two big chunks of revenue will come from dividends of the Reserve Bank of India, nationalised banks, and financial institutions. The government, however, does not seem optimistic on this front.
For FY23, this figure has been estimated at Rs 73,948 crore. This is 27 percent lower than the revised estimate of Rs 1.01 lakh crore for FY22, which has been revised upwards by a massive 89.4 percent after the central bank transferred a dividend of Rs 99,122 crore in FY22.
Disinvestment receipts, on the other hand, are another downside surprise having been estimated to add just Rs 65,000 crore to the coffers next year. Following a year in which the government's stiff disinvestment target of Rs 1.75 lakh crore had to be slashed to Rs 78,000 crore, the Department of Investment and Public Asset Management has an interesting few months ahead.
The government's focus remains firmly on boosting the economy through capital expenditure. For FY23, the Centre has allocated Rs 7.50 lakh crore for capital expenditure, up 24.5 percent from the revised estimate of Rs 6.03 lakh crore for FY22.
Major expenditure heads include the Mahatma Gandhi National Rural Employment Guarantee scheme, which has received an allocation of Rs 73,000 crore for FY23.
The COVID-19 pandemic has forced the government to increase its outlay for the rural job plan due to the loss of urban jobs for migrant workers. The estimate for FY22 has been revised to Rs 98,000 crore from the budgeted Rs 73,000 crore.
| FY23 BE (Rs crore) | FY22 RE (Rs crore) | FY23 BE vs FY22 RE | |
| MGNREGA | 73,000 | 98,000 | -25.5% |
| Jal Jeevan Mission | 60,000 | 45,011 | 33.3% |
| National Education Mission | 39,553 | 30,796 | 28.4% |
| National Health Mission | 37,800 | 34,947 | 8.2% |
| PM Awas Yojna | 48,000 | 47,390 | 1.3% |
| PM-Kisan | 68,000 | 67,500 | 0.7% |
| Urea subsidy | 63,222 | 75,930 | -16.7% |
| FCI food subsidy | 1,45,920 | 2,10,929 | -30.8% |
| Decentralised food grain procurement subsidy | 60,561 | 75,290 | -19.6% |
| NHAI | 1,34,015 | 65,060 | 106.0% |
| Road works | 64,568 | 65,687 | -1.7% |
The Jal Jeevan Mission has received Rs 60,000 crore, while the national health and education missions have been allocated Rs 37,800 crore and Rs 39,553 crore, respectively.
The increased allocation for the National Highways Authority of India and road works indicates the government’s infrastructure push. For FY23, the highways authority has been given Rs 1.34 lakh crore, while road works has got Rs 64,568 crore.
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