ANI
As India eagerly awaits Finance Minister Nirmala Sitharaman's Budget speech on February 1, several crucial factors will shape the financial roadmap for the coming fiscal year. This interim Budget is anticipated to set the stage for a more comprehensive plan expected around June-July. Let's delve into the key areas to keep an eye on during the announcement.
After witnessing a surge to 9.2% of the GDP during the pandemic, the fiscal deficit has been a focal point for the government. The target of a 5.9% deficit for the current fiscal year is likely to be met, with a further reduction to 5.3% anticipated for the next financial year. Economists emphasize monitoring the pace of fiscal consolidation and the government's policy priorities.
Positive indicators regarding the budget deficit stem from a substantial increase in tax receipts. Income tax has risen by 30%, corporate tax by 20%, and GST by 10%, according to HSBC Holdings. While the government aims to bring down the deficit to 4.5% over time, the emphasis on infrastructure and subsidy control aligns with positive economic growth prospects.
With the launch of Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan #PMJANMAN on 15th November 2023, there is an increased focus on improving the socio-economic conditions of the Particularly Vulnerable Tribal Groups #PVTGs. #PromisesDelivered pic.twitter.com/YeHhoSAeAg
— Ministry of Finance (@FinMinIndia) January 29, 2024
Borrowing is expected to remain near a record of around US$180.5 billion in the upcoming fiscal year. The bond market, however, appears less concerned, as overseas demand is poised to surge when India secures a place in global bond indexes.
The government's focus on capital expenditure has fueled robust economic growth, with spending directed towards roads, ports, and power plants. While experts anticipate a slight easing in the pace of infrastructure spending, it is expected to remain elevated at 9-10%.
With more than 10,000 teaching and non-teaching posts already advertised for the 1st Phase of recruitment, Eklavya Model Residential School Programme will ensure quality education to ST and PVTG students in tribal-dominated areas. #PromisesDelivered pic.twitter.com/gIfq23N5PA
— Ministry of Finance (@FinMinIndia) January 29, 2024
Given challenges faced by farmers, including adverse weather conditions and measures taken to control food prices, economists anticipate increased financial support for the agricultural sector. The government's commitment to welfare programs, including farmer income transfers, housing, and health insurance, is expected to continue.
With over 29,000 estampages already digitised by @MinOfCultureGoI, Bharat Shared Repository of Inscriptions #BharatSHRI will facilitate digitisation of one lakh ancient inscriptions in the first stage with creation of a specialised repository in a digital epigraphy museum.… pic.twitter.com/Zi9kQLn6VP
— Ministry of Finance (@FinMinIndia) January 29, 2024
The Modi government has already increased subsidies on cooking gas and fertilizers and extended free food programs. Analysts anticipate a further boost in welfare spending, with schemes like farmer income transfers, housing for all, and health insurance likely to be expanded.
Media reports suggest the introduction of a social security fund for informal sector workers, including those in gig jobs. Subsidies on cooking gas and cheaper loans for women might also be on the agenda. There are speculations about doubling the annual payout to female farmers who own land.
As the Budget unfolds, it remains to be seen how these key elements will contribute to India's economic trajectory in the coming fiscal year. The government's approach to deficit management, fiscal fitness, and support for crucial sectors will undoubtedly shape the nation's financial landscape.
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