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Budget 2023 should look at reviving consumption and maintaining sustainable growth.

Date: 27-01-2023
Subject: Budget 2023 should look at reviving consumption and maintaining sustainable growth
In the midst of an expected global slowdown, India Inc is experiencing a few challenges but as a country we still remain one of the fastest growing economies. Commodity fluctuations and increase in prices of key inputs continue to dampen private consumption with exports and domestic demand slightly muted. Given this unprecedented scenario, it is essential and natural that Budget 2023 continues efforts to increase potential output and revive demand.

1. Rural Sentiment Improvement: Rural markets off late have not been able to contribute significantly as consumption has been low due to price increase. We expect the Budget to focus on committed capex investments to boost rural infrastructure and uplift the overall rural consumer sentiment. The government could continue big thrust on the rural housing scheme or allocating a good amount towards improving the rural infrastructure, so as to ultimately drive consumption

2. Agricultural momentum: Agriculture as a segment will play an integral role in shaping up India’s consumption story and hence we could expect the budget to focus on reviving rural demand and fund allocation schemes could be brought in for food grain subsidies. We also expect to see initiatives in the form of increase in MSPs, employment schemes such as MGNREGA for farm workers and other incentives to continue. Additionally, with agri-tech now being extremely critical for drivi ..

3. Exports Opportunity: With the onset of global uncertainties, supply chains and cross-border trade are issues of top-most priority for all businesses. Exports could pose as a great potential opportunity for India as most economies look to de-risk from supplies in China. Reduction of custom duties on certain products, finalization of additional free trade agreements with strategic countries, investments in the PM-GATI Shakti program for integrated logistics and a slew of measur ..
4. Augment Retail Growth: With a view to boost retail, we could anticipate schemes such as Pradhan Mantri MUDRA Yojana Scheme gaining focus, as these schemes could be a good avenue to provide financial support to small-scale Kirana and brick and mortar stores. Further, with omnichannel retailing, last mile deliveries are becoming more critical combined with high cost of operations and insufficient supply chain infrastructure. The government could look to address some of these se ..


5. Income Tax Thresholds: With a view to spurring consumption and disposable incomes, one could expect to see a rejig of the current income tax thresholds for individual taxpayers to lower taxes or enhance benefits by increasing qualifying deductions or increase tax rebates, as this may positively impact consumer spending
6. Manufacturing and Employment focus: Schemes towards promotion of local manufacturing in the form of manufacturing SOPs, tax regime changes, robust execution of PLIs could help India become a preferred destination for manufacturing globally. This will also undoubtedly augment job creation opportunities and improve investor sentiments abroad as well. Improved job market could further trigger rural migration and non-farm income, thus helping drive consumption
7. MSMEs to be centerstage: Like every year, we could expect immense support to be provided to MSMEs either by way of tax rebates, simplified compliances or easy access to capital. With the onset of ONDC and creation of Government e-marketplaces, MSMEs could look at leveraging a fair playing field and gain access and reach to a wider audience. The startup ecosystem will gain impetus as the government could look to liberalize further by way of tax benefits, eligibility conditions ..
8. Digital infrastructure investments: The Government’s focus on improving digital infrastructure across the country and working towards improving connectivity in rural areas could help drive the growth and make rural the next big battleground for consumer companies. With a fast-paced increase in the use of online channels, we anticipate a few regulations related policies and guidelines, data protection and privacy coming into effect. Further, the government could continue to pr ..
In our view, Budget 2023 is expected to harmonize with the previous budgets as it will primarily need to address elevated levels of inflation by devising measures to revive consumption for sustainable long-term growth. Increasing investments in infrastructure, skill upgrading for digital augmentation, job creation, relaxed FDI, and overall MSME development could help re-kindle consumption.

Source Name:-Economic Times



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