Budget 2023-24 Expectation: Focus can be on manufacturing, infra development, employment, exports to promote growth

Most economic activities show positive signs of strong economic growth. Rising energy use and financial transactions suggest that businesses and consumers are becoming more active, which can lead to increased economic activity. GST collections up A rise in Goods and Service Tax (GST) collections is also a sign that businesses are doing well and consumers are spending more money. High passenger traffic is an indicator of increased travel and tourism, which is another important component of economic growth. These are all positive signs that the economy is expanding and that businesses and consumers are becoming more active. Industrial sector performance mixed: The overall performance of the industrial sector is mixed, with some areas showing strength while others are weak. Manufacturing is said to be in a slow phase and weak in terms of consumption of capital goods, which means it is not performing as well as it could be. However, the positive intermediate and infra up are signs of strength and growth in the industrial sector. It is important to note that the industrial sector is complex and can be influenced by a variety of factors such as economic policies, technological advancements and global events. Therefore, it is essential to keep an eye on the trends and developments in this sector to understand its overall performance. Budget to focus on local manufacturing, infra development: The broader focus of Budget 2023 could be to promote growth with a focus on local manufacturing, infrastructure development, employment and exports. Accordingly, we believe Healthcare, Automotive, Infrastructure, Manufacturing and Metals (aluminium, iron and steel) are some sectors which might be in focus this Budget. In Healthcare, the budget should be increased by 30-40 percent as there is a growing need for health facilities and infrastructure across the country. In Automotive sector, Electric Vehicle (EV) segment would remain in special focus as industry has sought an extension of subsidies for EVs. The industry has also sought the inclusion of light to heavy commercial vehicles in it to promote electric mobility. The Aluminium Industry has sought reduction in basic customs duty and correction of inverted duty structure on critical raw materials. In steel, an industry which accounts for about 2 percent of the GDP, while its diverse application across sectors makes it a harbinger of economic activity. As per the National Steel Policy 2017, the Indian steel industry employs over 5 lakh people directly and close to 20 lakh indirect employment. Steel industry’s wish list: The steel industry would be eyeing for following special announcements in the Budget 2023. · PLI scheme for manufacturing high-grade specialty steel · Inclusion of Steel in RoDTEP: The Remission of Duties and Taxes on Export Products (RoDTEP), scheme that offers refunds against various embedded taxes to exporters across sectors such as automobiles and agricultural products. · Removal of export duty: The industry expects for removal of the export duty levied earlier this year. · Full exemption of custom duty on steel mill rolls in India: Almost 90 percent of the demand for steel mill rolls in India is met through imports with a 7.5 percent customs duty being currently levied. This increases the cost of steel production also and affects the competitiveness in the international markets. · Zero import duty on stainless steel scrap: This move will go a long way in reducing carbon footprint. · Rationalisation of import duty on stainless steel flat products will be a step in the right direction towards ‘Atmanirbhar Bharat’ in stainless steel. Implementation of NLP will ease bottlenecks Apart from the above-mentioned industries the implementation of National Logistics Policy (NLP) which could ease bottlenecks and reduce costs. India’s logistics cost is around 14 percent of its GDP. Logistics players are expecting government to decrease the logistics cost to 8-10 percent of the GDP to bring it to par with other developing countries. Budgetary support may help rural economy Meanwhile in rural economy, the performance has been a concern, but it may improve due to lower food prices. Food inflation, which is the rate of increase in the cost of food, is currently much lower compared to non-food inflation, which is the rate of increase in the cost of items that are not food. This could be due to good crop production and support from the Budget which may help to keep food prices low. Lower food prices can be beneficial for the rural economy because it can help to increase the purchasing power of rural consumers, which in turn can lead to increased economic activity and improved overall economic conditions. However, it’s important to note that the rural economy can be affected by various factors such as weather conditions, government policies, and global economic trends. Focus of economic policy on growth, fiscal consolidation The focus of economic policy is on growth and fiscal consolidation. ‘Fiscal consolidation’ refers to policies that aim to reduce government budget deficits and stabilize public finances. When combined with a focus on growth, this can help to promote economic expansion while also ensuring that government finances are sustainable in the long-term. Measures such as improving farm prices and boosting rural income are expected to support the growth of the rural economy, while providing support for industry and infrastructure can help to encourage growth in these sectors. Overall, these policies are expected to help stabilize growth and improve economic conditions overall. It is important to note that achieving growth and fiscal consolidation at the same time can be challenging as they can have conflicting goals. Fiscal consolidation usually involves cutting public spending which can slow down growth, whereas growth and expansion policies require increasing spending. Therefore, it requires a well-coordinated and balanced approach to balance these goals. The government is expected to continue implementing existing measures rather than introducing major new initiatives in the economy. This implies that the government is likely to focus on consolidating and building upon the progress that has already been made rather than introducing significant new policies. This approach can have its advantages, such as allowing existing policies to fully take effect and avoiding disruptions caused by major changes. It can also help to ensure consistency and stability in economic policy, which can be beneficial for businesses and investors. Government finance is in better shape The government’s finance in the current fiscal year (FY23) is in better shape than it was in previous years. Revenues are higher, spending and deficit are lower than budgeted numbers, and tax collections are up. Additionally, non-tax revenues are also performing well and 74 percent of the budgeted amount has already been accrued. The government’s expenditure is also contained and the deficit is lower than average. Overall, it appears that the government’s financial situation is improving. The writer is Head Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers (@rathi_online) Views expressed are personal Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.