Last full budget ahead of 2024 general polls: Will Budget 2023 be populous or pragmatic? Experts explain

As the government is scheduled to present its last full budget 2023 on Wednesday, February 1, ahead of the general elections next year, the experts believe that it shall be a largely prudent/progressive one coupled with some benefits and schemes for various sections of the society.

In the coming week, finance minister Nirmala Sitharaman is all set to present the union budget for the financial year 2023-24 (FY24) in Parliament. Amid the general elections in 2024, the Budget next year will be presented twice -- first interim budget before polls and the second full budget after the elections.

“The budget 2023 will largely be pragmatic and the government will go for a long fiscal prudence path”, Bank of Baroda’s chief economist Madan Sabnavis said, adding that it, however, will try to give certain kinds of benefits to various sections within whatever space is available.  

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According to Sabnavis, the government will aim to reduce the fiscal deficit ratio, which was promised to reduce by 2025-2026. Earlier, Goldman Sachs, a global brokerage firm, had also estimated in its expectations that the central government may cut the fiscal target below 6 per cent in Budget 2023.

Though the government’s approach will be prudent, the focus may not be much on additional taxation, Sabnavis said. He added, the government may give some benefits to the corporate sector by announcing higher capital expenditure in FY24.

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In Budget 2022, the government announced around a 35 per cent rise in capital expenditure for the current fiscal year.

While Anjan Roy a former economist at ASSOCHAM - a non-governmental trade association and advocacy group – said the government is expected to maintain professionalism will tabling a pragmatic budget in the coming week, however, a bit of populism tinge is also possible.

The focus may likely be more towards farmers and may give impetus to overall rising demand in terms of manufacturing, investments and others, Roy further said in his comment.

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Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company said that the budget 2023 is likely to be growth-oriented by increasing spending on infrastructure, healthcare, and education.

“The budget has to assure the investor that it is on the path to fiscal prudence while keeping tax rates stable. This is possible if budget 2023 raises non-tax resources by asset monetisation and plug tax loopholes,” Shah said in his upcoming budget expectations.

Sandhya Sakhuja, Director, Vedic Cosmeceuticals, said that the Wellness industry in India is growing at an accelerated pace due to rising disposable incomes and growing awareness about wellness. "The industry is considered to be one of the fastest growing industries, valued at Rs 901.07 billion in 2018 and is forecast to reach Rs 2,463.49 billion by 2024, expanding at a compound annual growth rate (CAGR) of ~18.40 per cent during the 2019-2024 period. The sector needs support from the government to enable easier business entry, expand capacities and achieve global scale. The government also needs to allocate more funds towards research and development (R&D), innovation in production and production of raw materials.  There should be simple GST norms, to aid in the development and continued growth of this industry."

Before the general elections in 2024, and the 10 states’ assembly elections are scheduled this year, the experts are of the view that the budget may be a progressive mix of growth laced with populism.

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Hope that the government will lower personal income taxes for the middle classes to boost demand and expects it to implement better corporate tax and GST rebates which will further encourage industry growth and development, Abhijeet Sehgal, Co-Founder & CEO of 1Pay said in his comment.

IndiaFirst Life Insurance’s chief investment officer Poonam Tandon expects the government would target a few social welfare measures and spending towards the general election in 2024. However, “we do not expect Budget 2023 to be a populist one,” the expert added.