How was Union Budget 2023–24 able to simultaneously consolidate the defi cit and increase capital expenditure? Where did the fiscal space come from? And where is the capex going? Stepping back, how are broader public sector dynamics evolving—both borrowing and capex? As debt has surged post pandemic, focus will turn to medium-term fi scal imperatives. What is India’s debt-stabilising nominal GDP growth? And if defi cits must be reduced in the coming years but health, education and infrastructure spending must simultaneously go up, where can the fi scal space come from? And why is it important to focus on direct taxes—instead of indirect taxes—on the revenue side, while increasing absorptive capacity to spend on the expenditure side? This essay seeks to answer these questions.
