Finance Minister Nirmala Sitharaman is all set to present the central government’s last full Budget on February 1, 2023, ahead of the 2024 Lok Sabha elections. Companies, organisations, and individuals alike are eyeing the budget as the rising inflation and fear of the global economy slipping into a recession grows. Over the past two years, the fiscal deficit target has been above Rs 15 lakh crore as the government focused more on providing relief to its citizens. The revenue deficit target has been reduced this year as compared to the previous fiscal year. Meanwhile, the capital expenditure target has increased significantly in the past five years, as India aims to achieve a $5 trillion economy goal. The disinvestment target seems far less than the previous year but deals like LIC and Air India have helped the government secure significant funds.
Fiscal deficit target remains above Rs 15 lakh crore
The government’s fiscal deficit target has remained above Rs 15 lakh crore for the past two years after being below Rs 8 lakh crore in the years before covid 19 pandemic. The gap can be attributed to the geopolitical situation and other crises as the government spent more on providing relief to the citizens by ensuring free covid vaccines and not letting fuel prices skyrocket. A fiscal deficit is when the government spends more than it earns. For the FY22-23 the target is set at Rs 16.61 lakh crore.
Capital expenditure (capex) target increased from Rs 3 lakh crore to Rs 10 lakh crore
The government capital expenditure (capex) target on the other hand has increased significantly in the past five years, from Rs 3.43 lakh crore in FY18-19 to over Rs 10 lakh crore in FY22-23. In FY21-22 Capex target was Rs 11.37 lakh crore. Though there is a marginal decline in capex as compared to the previous financial year, analysts suggest that India will invest more in assets in the future, moving closer to its $5 trillion economy goal. The capex is the amount the government spends on acquiring assets like buildings, machinery etc. The capex target is set at Rs 10.67 lakh crore for FY22-23.
Revenue deficit target reduced to Rs 10 lakh crore
The government reduced its revenue deficit target to Rs 9.9 lakh crore for FY22-23 from Rs 11.40 lakh crore in the previous financial year. It has been rising for the past five years but the marginal decline seems positive. The revenue deficit represents the difference between the government’s projected amount of income and the real income.
Disinvestment fall but next year crucial for investors
From Rs 1 lakh crore in FY17-18 and Rs 2.1 lakh crore in FY20-21, the government has decreased its disinvestment target to Rs 65,000 crore in FY22-23. Most of its proceeds so far came from Life Insurance Corporation (LIC