Budget 2023: Modi Govt 2.0's last full budget before 2024 elections, elbow-room limited

Union Finance Minister Nirmala Sitharaman will on 1 February 2023 present the last full budget of the second Narendra Modi government.

Although Lok Sabha elections are just over a year away, the government's elbow-room to announce large-scale populist measures may be limited due to the global slowdown and local challenges. These were also highlighted by the Economic Survey tabled in Parliament, which predicted that India's GDP growth is likely to slow down from 7% in 2022-23 to 6.5% in 2023-24.

Finance Minister Nirmala Sitharaman will have to do a tight-rope walk between staying fiscally prudent and general public expectations of lower taxes and a wider social security net, while at the same time firing the engines of the economy before general elections.

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This will be Sitharaman's fifth straight budget at a time when the economy is slowing due to global headwinds and specific sectors need attention.

In the run-up to the Budget presentation, expectations are rife that she may tweak income-tax slabs to provide relief to the middle class and increase spending on the poor through programmes such as the rural job scheme while ramping up financial incentives for local manufacturing.

But all this she has to do while staying on the course of the fiscal consolidation path. To her aid are inflation falling below the target and buoyancy in tax collections. Healthcare, education and the rural economy may get a first call on such revenues as well as sectors that create jobs, particularly in small businesses.

(With PTI inputs)