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Domestic rating agency CRISIL has estimated FY23 real GDP growth at 7.8 per cent as compared with the 8.5 per cent projected in the Economic Survey. It said ‘All said, risks to India's economic outlook are still skewed towards the downside’. It also said Finance Minister Nirmala Sitharaman's Budget proposals focused on loosening the purse strings by boosting capital expenditure and going slow on fiscal consolidation are aimed in the right direction. The agency said global growth is expected to slow this year as major economies see a withdrawal of monetary and fiscal stimulus. It will have a direct bearing on India's growth prospects as exports have been a key demand driver of domestic growth during the pandemic.

It said energy prices, especially that of crude oil, are likely to continue firming up, partly owing to geopolitical issues and Brent crude will average up to $85 a barrel as against $70.44 in 2021, which will curtail growth, stoke inflation and widen the current account deficit. Additionally, even if global supply chain disruptions are expected to ease, critical raw material shortages such as those of chips could take time to tide over. The agency expects the nominal growth to come at 12-13 per cent, higher than the 11.1 per cent Budget Estimate, and the headline inflation to average 5.2 per cent. It said the Budget makes way for the 35 per cent increase in capital expenditure by tightening the belt around revenue expenditure, and the government has refrained from giving any direct consumption support in the Budget. It added that frontloading infrastructure spending could bring about faster growth.

The agency said the commitment to the Mahatma Gandhi National Rural Employment Guarantee Act has been reduced to Rs 73,000 crore for FY23 from the Rs 98,000 crore in FY22 and Rs 1.11 lakh crore in FY21, as part of the expenditure cuts. It said ‘extending this job guarantee scheme could have acted as a bridge for boosting short-term incomes and consumption in the rural areas before growth becomes broad-based and the investment cycle kicks off’. On the revenue side, the agency commended the pairing of divestment targets to a realistic level but warned that tightening of financial conditions amid monetary policy normalisation could further add challenges on this front.