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Balancing Growth with Fiscal Consolidation
This article examines the implications of the structural changes in the budget both for the current year and in the medium term. It concludes that while augmenting capital expenditure growth may be desirable, the adverse impact of reducing revenue expenditure growth and its feasibility should not be ignored.
This article examines the implications of the structural changes in the budget both for the current year and in the medium term. It concludes that while augmenting capital expenditure growth may be desirable, the adverse impact of reducing revenue expenditure growth and its feasibility should not be ignored.
The union governments 2023–24 budget signals a temporary dip in growth as compared to its preceding year and prospect for 2024–25. This dip is caused by the ongoing global economic slowdown and supply-side uncertainties affecting quantity and prices of crude oil and other commodities. The task before the government was to minimise the adverse impact of the global economic situation on growth and employment while ensuring a return to a credible fiscal consolidation path. This task has been addressed by changing the balance between growth of revenue and capital expenditures. In this article, we examine the implications of this structural change both for the current year and in the medium term.
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