Review of Union Budget 2023-2024

By: ISL | 8 February, 2023

Before the Lok Sabha elections in 2024, India's Finance Minister unveiled the final full-fledged Union Budget (for 2023–24).

• Considering these obstacles, the GoI has committed to a 5.9% fiscal deficit for FY2024 and a route to fiscal reduction of 4.5% by 2026, while also boosting capital spending to 3.3% of GDP (and 4.5% if you include interest-free lending to states).
• 5.9% will be the fiscal deficit in FY2024. The 6.4% deficit for FY2023 was not changed. The government has set the fiscal deficit for 2023–2024 at 5.9% in order to meet its goal of bringing the deficit below 4.5% of GDP by 2025–2026.
• The decrease in the fiscal deficit figure was anticipated, and it was mostly driven by a post-pandemic reduction in subsidies and a softening of global commodity inflation. The budgeted 6.4% deficit for FY2023 was maintained.
• Higher subsidies are mostly too responsible for the slippage: The government's spending for FY2023 was increased from the budget projection of 39.4 lakhs crore to 41.8 lakhs crore. The main reason for this was greater revenue and expenditure. In comparison to budget forecasts of 31.9 lahks Cr, revenue spending for the year totaled 34.6 lahks Cr.
• More funding under the categories of food and fertilizer subsidies as well as new funding for retirees of the military forces under the "one rank one pension" program were major factors in the higher than planned revenue spending.
• The slippage was further exacerbated by higher provisions of one-time grants to Oil marketing central public sector businesses to address under-recoveries and track renewals of railways.