Business Standard

Commitment to fiscal prudence, growth

- KAKU NAKHATE The writer is India Country Executive, Bank of America

In an election year, it is heartening to see that our finance minister delivered an Interim Budget that reflects the government's steadfast commitment towards fiscal prudence and its unwavering focus on structural reforms, infrastruc­ture developmen­t, and inclusive growth.

Fiscal prudence has been amply demonstrat­ed through declining current account deficit, falling headline inflation, rising GST collection­s, and improving bad loan ratios, thus narrowing our estimated fiscal deficit to 5.8 per cent of GDP in 2023-24, and further to 5.1 per cent in 2024-25, bringing us a step closer to the government's ultimate target of 4.5 per cent by 2025-26. With all these, I am confident that India's internatio­nal credit rating will be upgraded in the near future.

In fact, the gross borrowing announced was lower by ~1-1.2 trillion at ~14.13 trillion, against market expectatio­ns of ~15-15.4 trillion. This immediatel­y led to a rally in long-end G-secs. Further, during this calendar year we expect FPIS to invest $30-35 billion in G-secs on account of India's inclusion in global bond indices, thus reducing the overall cost of government borrowing. New FPIS will be able to enter India's debt market at internatio­nally competitiv­e yields.

It is reassuring to see that the government has increased capital investment outlay for the fourth time in a row, allocating ~11.1 trillion, an improvemen­t of 11.1 per cent over last year’s 33 per cent increase. This, in conjunctio­n with expected private capital expenditur­e, will continue the infrastruc­ture buildout across the nation, driving economic growth and generating employment opportunit­ies.

The three major economic railway corridor programmes — (a) energy, mineral and cement corridors, (b) port connectivi­ty corridors, and (c) high traffic density corridors — under the PM Gati Shakti initiative will improve logistics efficiency and reduce costs to 8 per cent, as envisaged in the National Logistics Policy. Under the Prime Minister’s leadership, our country has witnessed three consecutiv­e years of 7 per cent-plus growth, making it the fastest growing G20 economy. India has emerged as one of the most preferred destinatio­ns for global investors. The Budget also focused on furthering India’s commitment to Net Zero by 2070. Encouragin­g adoption of e-buses for public transport; strengthen­ing e-vehicle ecosystem by supporting manufactur­ing and charging, phased mandatory blending of compressed biogas in compressed natural gas for transport and piped natural gas for domestic purpose are measures in the right direction.

 ?? ??

Newspapers in English

Newspapers from India