Budget picks measures to boost growth without fueling inflation | News Bharat

The center is focusing on carefully selecting programs and new programs for the upcoming budget that would boost growth without undermining efforts to curb inflation, according to a person familiar with the government’s budget discussions.

The main objectives of the February 1 Budget were to stimulate exports, expand and consolidate measures already in place to attract investment in strategic and sunrise sectors, reduce the current account deficit, and establish a clear trajectory of high economic growth while pursuing fiscal consolidation, The person asked not to be named.

A widening merchandise trade deficit and net disbursements from investment income pushed India’s current account deficit to $23.9 billion at the end of June, according to the Reserve Bank of India.

Based on the initial deliberations of the 11 secretarial committees tasked with identifying the key milestones to be achieved in this regard, the FY24 budget will also incorporate proposals for the medium-term goal of making India a developed country. “Obviously we need to make sure that economic growth remains strong. How do you balance growth and inflation control – that will be the context in which the budget is presented. We have taken steps to attract investment into the strategy by giving a big boost to manufacturing through production-linked incentives and carefully selected sunrise industries. The budget will look at all the schemes and projects that can be implemented to ensure we are on a clear, high-growth trajectory,” the person said.

Stimulating exports and reducing the current account deficit will also be in focus, the person said.

To be sure, it is not easy to develop the economy, curb inflation and narrow the trade and fiscal deficits at the same time, and the choice of options becomes very important in this context.

For example, in the economic stimulus package offered during the pandemic, credit guarantees played a key role in stimulating economic activity without direct government spending. With nominal economic growth expected to be higher than expected at 11.1%, the government is likely to expand absolute spending in the next fiscal year while sticking to its fiscal consolidation path.

Sachchidanand Shukla, chief economist at Mahindra Group, said it is not unreasonable to expect a real growth rate of 6.8-7% for the current fiscal. “Given the bitter lessons from the UK fiscal policy disaster and schizophrenic global markets, I would like to see in the Budget a commitment to adhering to the medium-term fiscal consolidation path. Measures to support the recovery of rural consumption and maintain capital expenditure run rates should also be part of the next Budget other important considerations.”

The government’s capital expenditure allocation for the current financial year is ¥$7.5 trillion, more than 45 percent of which had been spent by the end of September, according to data provided by the Accounting Comptroller.If grants to the states are included, the center’s planned effective capital expenditures for the current fiscal year are ¥10.7 trillion.

As well as immediate demands to support growth without fueling inflation and fiscal deficits, the budget is expected to incorporate earlier thinking from groups of ministers who are now breaking down the goal of reaching advanced economy status into milestones and actions. However, final reports from these groups may take time.

The rapidly deteriorating global growth outlook, combined with high inflation and deteriorating financial conditions, has fueled fears of an impending global recession.

The government’s calculations, based on the Finance Ministry’s October economic outlook released last week, are that while a slowing global economy is likely to dampen India’s export prospects, resilient domestic demand and a renewed investment cycle will drive growth. In a world where monetary tightening has dampened growth prospects, India appears capable of growing at a moderately buoyant pace in the coming years, the ministry said in its outlook.

In September, the Reserve Bank of India lowered its GDP growth forecast for the current fiscal year to 7% from an earlier forecast of 7.2%, citing headwinds from ongoing heightened geopolitical tensions and tightening global financial conditions.

An email to the Treasury Department on Saturday seeking comment on the matter had not been responded to by press time.

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