Budget 2023: Confident about numbers but can’t land Boeing 747 on a helipad, says Finance Secretary Somanathan

Finance Secretary TV Somanathan has expressed confidence about the 2023-24 Budget numbers, saying they were realistic estimates and not conservative.

Speaking on February 1 at the post-Budget press conference, Somanathan said the Budget was “big” and things can go up and down.

“The revenue estimates in the Budget do not assume a buoyancy greater than 1 for the coming financial year. Gross taxes are expected to grow by the same 10.5 percent by which we have estimated the GDP to growth, which is slightly lower than the figure implied by the Economic Survey,” Somanathan said.

“If the experience of this year is repeated next year, then it (tax buoyancy) may in fact be more than 1,” he added.

The Budget for 2023-24 has estimated that gross tax revenues will rise by 10.5 percent to Rs 33.61 lakh crore, in line with the nominal GDP growth assumption of 10.5 percent.

Commenting on the nominal GDP growth assumed for next year – which at 10.5 percent was lower than the Economic Survey’s forecast of 11 percent – the finance secretary said the Budget numbers had to have a “higher level of probability of being exceeded than the Economic Survey”.

“We are expecting nominal growth of at last 10.5 percent…. We are reasonably confident that we will exceed 10.5 percent nominal growth for the purposes of estimating our revenues,” he said.

Of planes, helipads and fiscal deficit

The Budget has estimated a 7.5 percent increase in total expenditure to Rs 45.03 lakh crore for next year. According to Somanathan, much of this increase was on account of discretionary spending.

“We have kept a very tight lid on the irreducible types of expenditure. And therefore there is room in the Budget both on the revenue and on the expenditure side for us to reach that fiscal deficit target by 2025-26.”

“I think the very fact that the commitment to 4.5 percent (fiscal deficit target for 2025-26) was reiterated word by word in this Budget gives you an indication that we feel we have the means and the ability to reach that target by 2025-26,” Somanathan added.

Speaking on the revised estimates for gross borrowing for 2022-23, the finance secretary said the number of Rs 14.21 lakh crore was firm and the Centre was confident of staying within it.

As per the Budget, the fiscal deficit for the current year, in absolute terms, is seen at Rs 17.55 lakh crore, up from the budget estimate of Rs 16.61 lakh crore. However, given that the nominal GDP growth for the year, at 15.4 percent, has greatly exceeded the government’s budget assumption of 11.1 percent, the Centre is on track to meet the fiscal deficit target of 6.4 percent of the GDP.

“We are confident that the (fiscal) deficit that we have projected for the revised estimate is reasonable and will not be exceeded significantly. Beyond that I cannot give you a pin-point answer. You cannot land a Boeing 747 on a helipad. There will be minor fluctuations here and there. But at a macro level, our numbers are good. I am confident about that,” Somanathan said.