Budget 2023: Is last full budget of Modi govt going to be for rural India?

Budget 2023, will be the last full budget of the present government ahead of the general elections to be held in mid-2024. UBS India believes that this budget is likely to be be rural and infrastructure focussed.

UBS India economist Tanvee Gupta Jain, says the upcoming budget is likely to boost rural/agriculture spending by 10 billion US dollar -- a growth of 15 per cent from the last budget and maintain double-digit 20 per cent growth in public capex over the current fiscal, given that the nation will be going to polls in mid-2024.

However, she noted that the government is unlikely to go beyond fiscal boundaries with its election-oriented budget and also expects the subsidy burden to ease significantly in FY24, creating more fiscal space to reallocate money towards existing rural schemes, including the rural jobs scheme MGNREGA, rural housing and roads, amongst others.

She also expects the economy to moderate further and pencils a GDP growth of 5.5 per cent for next fiscal, much lower than the consensus 6 per cent, saying the slowing global growth and delayed impact of monetary tightening, coupled with the spillover effect of an expected global slowdown in this year.

However, she also said the country's structural growth story remained intact and therefore continued to expect the domestic economy to be able to maintain potential growth of 5.75-6.25 per cent in the medium term, as she sees the government to continue with its push on capex, manufacturing and digitalisation.