Union Minister Nirmala Sitharaman will present the Union Budegt for upcoming financial year 2023-24 on February 1. The Budget assumes significance as this year's Budget will be last full financial document ahead of elections due next year.
The budget is expected to announce a host of measures to spur growth in the economy while maintaining fiscal prudence.
Finance Minister Sitharaman will keep on the path of fiscal consolidation and opt for narrowing the FY24 fiscal deficit to as low as 5.8 per cent in the upcoming Budget, analysts said on Tuesday.
The government may go for a fiscal deficit number which will be far lower than the 6.4 per cent of GDP budgeted for FY23, they said, pegging the Budget figure for the next fiscal in the range of 5.8 - 6 per cent.
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Given the fact that this will be the last full Budget of the present government, there may be a temptation to make it into an expansionist one. In the two years following the pandemic, the fiscal deficit—one of the key parameters while assessing macroeconomic stability which also influences inflation—went up till 9.3 per cent.
India will have to continue on this journey of fiscal consolidation and it does not have the luxury of pausing for the next few years, the analysts made it clear.
Meanwhile, in pre-Budget expectations, insurance sector of the country has sought from the Budget to increase foreign direct investment (FDI) limit to 100 per cent from current FDI limit of 74 per cent as the insurers will get fresh capital.
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"Among the host of expectations from the budget, the proposal to increase the FDI limit to 100 per cent in insurance is unlikely be introduced in the upcoming Budget, especially since the FDI limit has just been recently increased to 74 per cent. However, this is a conversation that we must have with the policy makers. 100 per cent FDI will help insurers to infuse fresh capital into the system and secure the next two decades of growth. The Indian economy and the insurance market are both tempting to insurers overseas," said Anup Rau, MD & CEO, Future Generali India Insurance.
"But let's also bear in mind that the number of insurers in India is infinitesimally small, compared to our global peers. Part of the problem is the challenge for global Insurers to find suitable local partners. With over 60 insurers between life and general insurance and a large number of them joint ventures, there is really an acute shortage of local partners, who either have the ability or the inclination to get into this space. One can't over state how critical permitting 100 per cent FDI is- it’s a lot easier (or less politically sensitive) for the administration to increase the FDI limit to 100 per cent than it was to increase from 49 per cent to 74 per cent," Rau added.
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(With PTI inputs)
