Modi had indicated that the government’s focus would be on four priority groups—women, farmers, poor and youth– if elected again.
The interim Budget to be presented in Parliament today will have some “guiding points” for the country’s economic growth trajectory, Prime Minister Narendra Modi said on Wednesday, adding that the “journey of inclusive development” would continue.
Sounding optimistic about the return of his government to present a full budget in July, Modi said, “I am confident that the country is consistently progressing, reaching new heights of development, and undergoing comprehensive and all-encompassing growth. A journey of inclusive development is under way. I hope this trajectory continues with the blessings of the public.”
Many analysts including rating agency Fitch expect the ruling dispensation to return to power for a third term after the general election to be held in April-May.
Modi had indicated that the government’s focus would be on four priority groups—women, farmers, poor and youth– if elected again.
“As you know, traditionally, when elections are imminent, the complete budget is not presented. We will adhere to this tradition and present the full budget after the formation of the new government. This time, the (Finance Minister Nirmala Sitharaman) will be presenting her budget tomorrow with some guiding points,” the prime minister said on the first day of the Budget session.
Given the post-pandemic fiscal consolidation with a better quality of spending, the interim budget 2024 may send out a message to the investors that the government is committed to the medium-term fiscal consolidation path.
The government could try to consolidate the fiscal deficit to 5.2-5.3% of GDP in FY25 given their medium-term fiscal consolidation target of reaching 4.5% of GDP by FY26. The focus on capital expenditure would likely continue, but at a slower pace given the fiscal constraint. Accordingly, the capex outlay could see up to 10% growth in FY25BE, compared with over 30% CAGR between FY21 to FY24BE.
The last interim budget presented on February 1, 2019, included some substantial announcements for farmers and the middle class but stopped short of major changes in tax structure as per tradition.
So, this time also the interim budget will likely give a clear message about the government’s pro-poor policies with fiscal prudence to make India a developed nation by 2047.
Against this backdrop, the government could largely improve upon ongoing schemes by tweaking them to add more beneficiaries or increase the benefit for a certain class of people. So, the government may enhance the financial assistance for PM Awas Yojana-Gramin beneficiaries from Rs 1.3 lakh/unit to Rs 2.4 lakh. Similarly, with the PMAY-Urban scheme ending in March this year, the Centre may unveil a new Rs 60,000 crore interest subsidy scheme for the urban poor and middle class for five years. Among others, it might earmark around Rs 90,000 crore for the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in the budget estimate (BE) for 2024-25, an increase of 50% over 2023-24 BE, in a strong signal to the poor ahead of general elections.
Source:financialexpress.com