A Tale of Two Macroeconomic Policies

The economic growth for India, in real terms, has been on the declining trend since the past couple of years. The second advance estimates, released by the Ministry of Statistics and Programme Implementation on 28 February 2023, estimated the real gross domestic product (GDP) growth to be at 9.1% in 2021–22 and 7% in 2022–23. This trend is expected to continue in the ensuing period which has been corroborated by the Economic Survey for 2022–23 which predicted the real GDP growth for India to be at 6.5% in 2023–24. Against this economic malaise, on 1 February 2023, the finance minister, through her fifth full year budget, sought to achieve an inclusive economic growth while maintaining the path of fiscal consolidation.

In pursuit of achieving economic growth, the budget focused on reviving the consumption demand and capital formation. Several measures were announced in the budget such as changes in tax slabs, decrease in corporation tax surcharge, increase in expenditure on roads, infrastructure, defence and railways, among others, in order to revive economic growth. Increase in capital expenditure along with the rise in expenditure on critical sectors will be helpful in enhancing economic growth, “crowding-in” of private investment, employment generation and insulating the Indian economy from
adverse impacts of global headwinds.