Privatisation, growth should remain Budget focus, says EAC-PM

The Economic Advisory Council to the Prime Minister (EAC-PM) on Thursday sought to suggest that the next Budget should devote increased revenues generated from higher growth towards capital expenditure and human development since Covid had led to a human capital deficit.

It also said the clear road map of privatisation and growth orientation of FY22 Budget should be maintained in FY23 as well.

In a statement issued after a meeting of the Council, the members hoped that the Indian economy is likely to grow by 7-7.5 per cent in the next fiscal year while contact-intensive sectors and construction should recover in 2022-23.

It, however, said this (high growth in FY23) should not mean that the Union Budget should project unrealistically high tax revenue or tax buoyancy numbers.

“Looking beyond the current fiscal year, EAC-PM members were optimistic about real and nominal growth prospects in FY23. Other than an element of the base effect, the contact-intensive sectors and construction should recover in FY23,” it said.

The Reserve Bank of India (RBI) has lowered the growth projection for the current financial year to 9.5 per cent from 10.5 per cent estimated earlier, while the IMF has pegged India’s growth at 9.5 per cent in 2021 and 8.5 per cent in the next year.

“Once the capacity utilisation improves, private investments should also recover. Therefore, members felt a real rate of growth of 7 to 7.5 per cent in FY23 was likely,” the statement said.

It noted that the Union Budget for FY22 was applauded because of reform measures, as well as transparency and realism in the numbers.