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ICICI Direct Report
Union Budget 2022-23 can be aptly termed as adoption of a new growth template led by vital capex allocation to drive the economy. Outlay of capital expenditure of ~Rs 7.5 lakh crore, up ~35% YoY (at 2.9% of gross domestic product), coupled with expanding the scope of private capex through production linked incentive for new age segments, is expected to deliver inclusive growth, job creation and welfare for all.
Among infrastructure segment, major emphasis has been placed towards highways (capex allocation up ~55% YoY) and water (allocation at Rs 60000 crore, up ~33% YoY in the 'Har Ghar Jal se Nal' scheme).
With the dual objective of growth and welfare, the Budget has hit the right chords in the current macroeconomic setup.
Interestingly, the Budget, presented in the backdrop of a likely pandemic aftereffect, has seen relatively conservative estimation of growth (merely ~11% nominal GDP in FY23) and tax receipt growth of ~14% YoY (excluding excise cut). Thus, there is a likelihood of lower than projected fiscal deficit, in our view.
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