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NEW DELHI : The central government’s FY23 budget to be presented in February should retain the focus on reforms, growth and realism in budget figures seen in the budget for this fiscal, Prime Minister Narendra Modi’s reconstituted Economic Advisory Council chaired by economist Bibek Debroy concluded at its first meeting on Thursday.  

The Council also said that FY23 budget should not have unrealistically high tax collection targets in spite of a likely 7-7.5% nominal GDP growth.  

An official statement from the Council said that members were optimistic about real and nominal Gross Domestic Product (GDP) growth prospects in FY23.  

“Other than an element of the base effect, the contact intensive sectors and construction should recover in 2022-23. Once capacity utilization improves, private investments should also recover. Therefore, members felt a real rate of growth of 7-7.5% in FY23 was likely," said the statement.  

“However, this should not mean that the Union Budget for 2022-23 should project unrealistically high tax revenue or tax buoyancy numbers. The Union Budget for 2021-22 was applauded because of reform measures, as well as transparency and realism in the numbers. EAC-PM Members were of the view that these dimensions should be carried forward into the 2022-23 Budget too, signalling use of the extra revenue in the form of capital expenditure and human capital expenditure, since Covid has led to a human capital deficit," the statement said.  

In FY22 union budget, finance minister Nirmala Sitharaman chose to step up spending on the healthcare sector and on capital expenditure in general to make healthcare more accessible and to give momentum to economic recovery.  

“There should also be a clear road-map for privatization and the growth orientation of last year’s Budget should also be maintained," said the EAC-PM statement. 

The government has identified a pipeline of assets for privatisation to raise resources for fresh investments which could add jobs and boost economic growth. 

The Council members were unanimous that union budget for FY22 was well taken in all the spheres due to its transparency, realism and its orientation towards reform and growth, EAC-PM said.   

Nirmala Sitharaman’s FY22 budget had sought to step up capital spending, offer incentives to local production and encourage more value addition in the local industry by recalibrating the customs duty structure. The economic shock during the second wave of the pandemic was less than that of the first as regional mobility restrictions this year were less harsh than the first national lockdown in FY21. According to the RBI, India’s economy may grow at 9.5% in FY22.  

The government has started work on the FY23 union budget and has completed one round of consultation with state chief ministers, finance ministers and lieutenant governors of union territories. 

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