Budget Preview - India's Fiscal Deficit May Be 6.1-6.2% Of GDP In FY23E: Motilal Oswal

Motilal Oswal Report

The Government of India will present the Union Budget 2023-24 on Feb 01, 2023. Although the Budget presentation is only one part of managing public finances, it continues to garner a lot of attention.

We believe the GoI will continue on its fiscal consolidation path, targeting a fiscal deficit of 5.6-5.8% of gross domestic product in FY24.

It is clear that the GoI has been very conservative in its tax receipt estimates in the past couple of years, which is in stark contrast to its earlier practice of presenting over-ambitious targets.

As a result, it remains very difficult to forecast FY24BEs. In this note, we present our projections for central government finances in FY23 and FY24.

Based on provisional data available for seven months-FY23 (Apr-Oct-22), our calculations suggest that gross taxes can exceed budget estimates by as much as Rs 4 trillion in FY23 (same as that projected earlier).

With a higher devolution and a shortfall in divestment, it means an over-achievement of ~Rs 2 trillion in total receipts in FY23.

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