SBI pegs FY23 fiscal deficit at Rs 17.5trn

Chennai: The upcoming Indian budget for 2023-24 will be a challenging one for the government to follow the roadmap for fiscal consolidation amidst a global environment of declining inflation, said a top economist of State Bank of India (SBI) in a report.

For India, this could make things difficult to set a nominal gross domestic product (GDP) number significantly higher than 10 per cent, with a deflator about 3.5 per cent. But this could also mean a higher GDP growth than anticipated at about 6.2 per cent, he said. He also said the fiscal deficit of the Indian government for FY23 will be about Rs17.5 lakh crore.

According to Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, for FY23, total receipts of the Government would be higher than the budget estimates (BE) by around R2.3 lakh crore, on account of higher direct tax receipts (Rs2.2 lakh crore), higher GST receipts (Rs95,000 crore), but lower dividends (Rs40,000 crore), lower fuel tax net of Cess (Rs30,000 crore) and lower disinvestment receipts (Rs15000-20,000 crore). "Meanwhile, expenditure is likely to be on the higher side of the BE by around Rs3 lakh crore on account of higher subsidy bill and additional spending announced by the Government. Taking this into account, the fiscal deficit of the Government in FY23 is expected to come at Rs17.5 lakh crore. However, higher nominal GDP growth (15.4 per cent) estimates will help in keeping the fiscal deficit at 6.4 per cent of the GDP," Ghosh said. As regards FY24, the government's expenditure is likely to increase by around 8.2 per cent over FY23 estimates to Rs 46 lakh crore, Ghosh said in the report. Subsidy bill which increased significantly in FY23 is estimated to be reduced in FY24 to around Rs 3.8-4 lakh crore and capital expenditure is expected to grow by 12 per cent.

Meanwhile, receipts (minus borrowing and other liabilities) are expected to grow by about 12.1 per cent with tax revenue receipts growth likely at 11 per cent.