Job-oriented capex likely

New Delhi: India's Federal Budget FY23's Capex thrust is likely to focus on rural welfare and employment generation schemes.

Besides, focus on health, housing and physical infra is expected to continue with areas such as railways and residential projects gaining more traction. Furthermore, MSMEs in sectors such as tourism, auto ancillaries amongst others might benefit from an enhanced ECLGS programme. In the previous fiscal, total Capex outlay rose over 30 per cent on a YoY basis to Rs 5.54 lakh crore (Budget Estimate). "The spending focus will likely be on welfare, rural, health and MSMEs," said Madhavi Arora, Lead Economist, Emkay Global.

"Moreover financial sector initiatives such as debt resolutions as well as higher FPI limits to facilitate divestment in select PSBs on sale could also be presented in the budget document." Notably, fiscal support is necessary at this juncture to ensure that the economy delivers a durable and sustainable GDP growth of 7-to-8 per cent in FY23-24.

"We expect a higher outlay for the healthcare infrastructure sector across the country and this is partly driven by the compulsions from the prolonged pandemic," said Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research. "An increase in rural infrastructure outlay is expected along with a robust allocation for MNREGA."

Moreover, higher spending on infrastructure and construction projects will continue as they have a positive spin off effects on employment and consumption demand.