BT Budget Roundtable: Govt has done well by giving precedence to growth over populism, say experts

India has done well in staying focused on fiscal discipline and economic growth in the proposals announced under the Union Budget 2023 over populism despite a series of state assembly elections slated this year and general elections scheduled for next year, economic experts have said.

“Despite an election year, the government has done a good job of not giving in to populism and retained its push to the infrastructure. Returns come in over time. This is one of the most progressive budgets by far,” former chief statistician India & former member of Union Public Service Commission (UPSC), TCA Anant told Business Today magazine’s editor Sourav Majumdar during the India Today-Business Today Budget Roundtable 2023 on Monday.

Agreeing with Anant, the group chief economic adviser at the country’s largest lender, the State Bank of India, Soumya Kanti Ghosh, observed that this was backed by healthy economic indices. These included capex as a percentage of GDP being at a 17-year high, revenue deficit as a percentage of fiscal deficit coming in at a 14-year low, the subsidy component being reduced to 1.3 per cent from a high of 3.6 per cent in the immediate aftermath of the Covid-19 pandemic and buoyancy in tax collections.

“Overall, the Budget has a clear orientation of moving towards an era of increased capital expenditure, creation of more assets and trying to move away from an overreliance on revenue expenditure and subsidy balance,” declared Ghosh.

Chief economist at the country’s largest private sector bank, HDFC, Abheek Barua felt that as the expansion of rail and road network alone wasn’t representative of the infrastructure sector, the hike in capex would help give a major push to several other projects. Especially since the private sector had been shying away from committing investments due to factors such as a beleaguered global economy. He also agreed that the era of governments seeking votes based on doles alone was getting gradually phased out.

“The conscious attempt by the [central] government to change the formula of political parties throwing money at the electorate before elections to saying that this was a very irresponsible thing to do. The move towards getting away from the revadi culture (doles) to hard economics, would give states the incentive of using economic performance as a vote catcher,” said Barua.

Referring to the increase in capex, a member of the government think-tank NITI Aayog, Prof. Ramesh Chand felt the allocation of unexpected capital outlay would help in achieving transformational goals. India, therefore, needed to do things differently such as ensuring complementarities in investment.

“We have a big scope for growth in manufacturing. Presently, agriculture is growing three times more than manufacturing. We, therefore, expect a moderate to high growth in manufacturing in the future,” averred Prof. Chand.

The experts also felt that economic growth would meet the Economic Survey’s projection of 6.5 per cent, with both inflation and the fiscal deficit being kept largely under check.

 
Also read: Grammy 2023: From India's Ricky Kej to Beyonce..

Also read: NHAI InvIT bonds to open every 15 days; will give 8.5% returns: Nitin Gadkari