India pegs fiscal deficit at 5.9% of GDP in last full budget before elections

NEW DELHI: India will focus on economic growth and job creation and cut down fiscal deficit, the Finance Minister said on Wednesday, presenting the government’s last full budget in parliament before elections due next year.

The aim is to have strong public finances and a robust financial sector for the benefit of all sections of society, Finance Minister Nirmala Sitharaman said.

Indian shares rise ahead of federal budget

India’s federal government will target a budget deficit of 5.9% of GDP for 2023/24, Sitharaman said, compared to 6.4% for the current fiscal year.

Here are the highlights of the budget:

Govt borrowing

• Govt targets gross borrowing of 15.43 trillion rupees in 2023/24

• Net market borrowings seen at 11.8 trillion rupees

Fiscal deficit target

• Aims to achieve fiscal deficit of 4.5% of GDP by 2025/26

Individual tax proposals

• Proposes to cut highest surcharge rate to 25% from 37.5% under new income tax regime * Proposes to raise rebate limit to 700,000 rupees under personal income taxes

Higher spending

• Outlay for capital spending increased 33% to 10 trillion rupees ($122.29 billion) in 2023/24

• The allocation is higher than the 7.5 trillion rupees budgeted for in the previous year and the highest on record

• Agricultural credit target raised to 20 trillion rupees for 2023/24

• Increases budget allocations to 790 billion rupees for affordable housing in 2023/24

• To provide 350 billion rupees for energy transition

• To provide incentives to replace old, polluting vehicles used by the central and state governments

• Revamps scheme for credit guarantee for small and medium businesses from April 1

• To provide collateral free credit of 2 trillion rupees under revamped scheme

Tax proposals for industry

• To consider a cut in customs duty on lab-grown diamonds

• Propose higher import duties on silver dores * To increase duties on items made from gold, platinum

• Customs duties on compounded rubber being raised. * Custom duty exemption extended to EV batteries

Aims for higher private investments

• Finance Minister Sitharaman says increase in public capex key to crowding in private investments * Says Indian economy has become the fifth-largest economy in the world in the last nine years

• Says the economy is growing the fastest among major economies

• Says budget adopts seven priorities including inclusive, green growth