Budget 2023: Time to lay the foundation for India’s greatness

“The future depends on what you do today,” said Mahatma Gandhi. As our finance minister Nirmala Sitharaman prepares to present the Union Budget for FY 2023-24, she stands at the threshold of a great opportunity – to lay the foundation for the “Amrit Kaal” and build the destiny and dreams of a young, vibrant India over the next 25 years.

Enviably, our country excels as the fastest growing major economy at a time when the global recession is knocking, Covid is lingering, Russia and Ukraine strife is persisting, and inflationary pressures are mounting. Internally, we are facing challenges from a high fiscal deficit, stubborn core inflation and a widening current account deficit (CAD) that may pressure the rupee.

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Focus on fiscal prudence

I firmly believe that Union Budget for FY 2023-24 will continue its focus on fiscal prudence, especially to meet its fiscal deficit target of 6.4 per cent of the GDP for FY23. Given the buoyancy in tax collections, particularly in the GST and personal tax collection, the government may lessen fears over an uncontrollable growth in fiscal deficit, reaffirming its commitment made in Union Budget 2022 of a time-bound roadmap, aiming a “fiscal deficit of 4.5 per cent by FY25-26”.

Banking on the growth momentum

Indian economy has been sustained by robust consumption, booming services and a stable manufacturing sector. This Budget may create an attractive and assuring environment in areas like capital expenditure, labour policies and tax regimes. While infrastructure is getting the attention, healthcare and education will require more boost.

Micro, Small and Medium Enterprises (MSMEs) a priority

The government made a remarkable effort to save the SME/MSME sector following the impact of Covid-19 through a moratorium, Emergency Credit Line Guarantee Scheme and other measures ensuring easier credit availability. However, the sector requires continued support. Policy-wise, securing a higher notch on global Ease of Doing Business indices will attract more foreign investment. While we can easily garner $100 billion in foreign direct investment, the impact of our flagship schemes like production-linked incentive (PLI) still need to accrue.

Also Read: Budget 2023: The FM’s inflation-growth dilemma

Agrarian growth

Lastly, for banks who fulfil the dreams of rural India, any budgetary support to sustain rural income, demand and consumption will be welcome. As the agriculture sector outlook is becoming brighter, consistent spending through schemes like MGNREGA is necessary to ensure the participation of “Bharat” in the India story.

For the urban population, any reforms in personal Income Tax brackets, reduction in slab rates can help put more money in their hands and support this robust consumption.

In terms of the banking sector, any policy initiatives to boost credit flow to rural and agrarian economy, technological boost to financial inclusion, greater legal refinement of the National Company Law Tribunal and the Insolvency and Bankruptcy Code will be a welcome priority.

(The author is the managing director and chief executive officer of AU Small Finance Bank)