Union Budget 2023-24 Expectations: CareEdge View

Support to economic growth and fiscal consolidation to be the twin focus areas.

<div class="paragraphs"><p>Indian Finance Minister Nirmala Sitharaman (Photo: Naveen Sharma/Reuters)</p></div>
Indian Finance Minister Nirmala Sitharaman (Photo: Naveen Sharma/Reuters)

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Our View:

  • Support to economic growth and fiscal consolidation to be the twin focus areas.

  • Continued focus on physical infrastructure to steer economic growth.

  • Increased spending on health, education and skilling for social infrastructure development.

  • Focus on development of agriculture and rural economy. Measures to support the export sector.

Fiscal deficit could marginally breach the target for FY23

  • Gross tax revenue likely to exceed the budgeted target by Rs 3.5 lakh crore, while non-tax revenue could witness a shortfall owing to lower dividend transfers from the Reserve Bank of India.

  • With higher subsidies announced, expenditure likely to exceed by Rs 3.3 lakh crore.

  • Centre’s fiscal deficit could exceed the budget target by Rs 0.8-1 lakh crore in FY23.

  • However, higher than budgeted growth in nominal gross domestic product will keep the fiscal deficit to GDP ratio under check in FY23.

Move towards fiscal consolidation in FY24

  • We expect, the government to move towards fiscal consolidation, budgeting a lower fiscal deficit to GDP ratio of around 5.8% for FY24.

  • With nominal GDP growth estimated to moderate to around 10%, we project gross tax collections to grow by 10% in FY24.

  • We could expect an improvement in non-tax revenue in FY24, on the back of estimated lower receipts in the current fiscal.

  • We have factored in a modest rise of 5% in revenue expenditure in FY24, with lower subsidy burden.

  • We expect capex to rise by around 10% over the budgeted Rs 7.5 lakh crore for the current fiscal.

Sector Specific Expectations:

Auto and Auto Components -

Post-pandemic, the automobile industry picked up a good pace driven by the growing demand and supported by various incentives like production linked incentives, Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India-II and EV-specific state policies. Constructive steps will be needed to further boost EV/hybrid traction.


  • Validity of FAME II to be extended beyond March 2024 to capitalise on the growing demand.

  • FAME II should also be revised to include commercial vehicles.

  • Rationalised GST across auto and auto components with a balanced structure that aligns taxation rates with emission norms for vehicles rather than basing it on the type of powertrain. The taxation rates should be the lowest for EVs.

  • Revision in PLI to include small/medium-size/start-up players contributing to the EV ecosystem.

Banking and Financial Services-

The FY23 budget focused on aggregate credit flow, Central Bank Digital Currency, LIC divestment, digital banking push, and amendments to strengthen the Insolvency and bankruptcy Code for the BFSI sector. This year, the focus will likely be on accelerating growth post-Covid and further strengthening the insolvency code to reduce timelines.



  • Clarity on regulations around CBDC post initial pilot projects.

  • Nudge public sector banks towards market borrowings for funding the credit push given the divergence between deposit growth and credit growth rates.

  • Provide additional incentives for long-term funds raised by banks from depositors or the capital markets.

  • Support lending to weaker sections/micro businesses with credit support, interventions, etc.


  • Non banking financial companies is to be brought at par with banks, small finance banks and housing finance companies in terms of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act regulations, wherein they are also allowed to apply for loans above Rs 1 lakh as against the cut-off of Rs 20 lakhs as of now.

  • Support lending to weaker sections/micro businesses with credit support, interventions, etc.


  • Streamline GST input credit norms on expenses.


With the government’s focus on infrastructure and housing for all, the cement sector is set to benefit further. In the FY23 budget, the government allocated Rs 7.35 lakh crore to key infra sectors as compared to Rs 5.54 lakh crore in FY22.


  • To increase the pace of infrastructure investments as envisaged under the National Infrastructure Pipeline.

  • Specific measures for attracting private investment in the infrastructure sector that would help achieve the goals as per the National Infrastructure Pipeline by 2025.

  • Increased allocation towards rural development in the pre-election period to achieve inclusive growth.

  • Reduction in GST applicable on cement that is currently 28%.

Pharma and Healthcare-

The Indian pharmaceutical industry has reported healthy growth largely in terms of volume during the last two decades. Placed thirteenth globally in terms of value, the present market size of the industry stands at around $47-49 billion in FY22, which grew at around 5-7% over FY21. The growth of the industry during FY22 was largely driven by higher domestic consumption while export sales remained stable.


  • Increase in government healthcare expenditure as a percentage of GDP.

  • Incentives such as deductions in income tax to increase investment in research and development.

  • Increase in basic customs duty on import of medical devices to boost domestic production under ‘Make in India’.

  • A higher limit of deduction on health insurance premiums under section 80D of the Income Tax Act.


Riding high on the implementation of 5G services, India expects exponential growth in digital penetration. This will play a crucial role in the overall development of the nation and the successful implementation of key government schemes. To deliver the promise of Digital India, the government’s focus to support the telecom industry is expected to continue.


  • Duty exemptions on key telecom equipment for 5G rollout.

  • Reduction in license fees from 3% to 1%.

  • Refund of an input tax credit against GST paid on telecom towers.

  • Incentive schemes to push Make in India drive for domestic manufacturing.

  • Promotion of private/captive 5G network to boost digital penetration in the enterprise segment, while protecting the interest of existing telecom service providers.

  • Abolishment of levying 5% of license fee towards universal service obligation fund for TSPs.

  • Removal of GST on the license fee, spectrum usage charges and payment of spectrum acquired through an auction. Alternatively, payment of Reverse Charge Mechanism on Government Services from the input tax credit.

Click on the attachment for more sector specific expectations:

CareEdge - Expectations From the Union Budget.pdf


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