Nehal Mota, Co-Founder & CEO, Finnovate
Union Budget 2023-24 was a tightrope walk for the Finance Minister. The GDP growth had to be strong enough to offset the recessionary impact of central bank hawkishness. However, this had to be done with lower fiscal deficit. The FM did just that. She announced a Rs20 trillion allocation for agricultural credit and 33% higher capex guidance at Rs10 trillion or 3.3% of GDP. Effective capex was Rs13.70 trillion or 4.5% of GDP. All this was managed through a sharp 22% cut in subsidies, leading to fiscal deficit lowered by 50 bps to 5.9% for FY24. The gross borrowing target for FY24 was pegged at a tad above Rs15 trillion. On the capital markets front, there were expectations of a macro push, more money in the hands of people and selected sector tweaks. Macros have been managed rather well. The budget refrained from any changes to capital gains tax, dividend tax or STT; which is understandable. However, at the lower end, the budget raised the exemption slabs and at the upper end reduced tax rates. The net result could be a huge surge in purchasing and investing power. This higher spending power is a big advantage for a consumer economy like India.
The legendary George Bernard Shaw called the budget an attempt to equate the earning capacity with yearning capacity. Even the IMF has acknowledged India as the fastest growing large economy in the next 2 years. The gap between government optimism and public scepticism called for a sound budget. The FM provided just that.
