Union Budget 2024: As Finance Minister Nirmala Sitharaman gears up to present the Interim Budget on February 1, expectations are high for strategic steps aimed at stimulating consumption while keeping inflation in check. The governments emphasis on encouraging more individuals to transition to the new tax regime, coupled with potential adjustments to tax slabs or an increase in the standard deduction, is seen as a pivotal move to inject more spending power into the hands of the public.Focus on women, marginalised communitiesIn a bid to invigorate the consumption narrative, Sitharaman is anticipated to introduce additional benefits for women and marginalised communities. This move aligns with the broader strategy to create a positive economic momentum leading up to the general elections.Tackling immediate economic challengesWhile Interim Budgets typically refrain from introducing fresh tax proposals or new schemes, the government may seek parliamentary approval to meet expenses for the first four months of the 2024-25 fiscal year. This interim budget is set to address pressing economic challenges that cannot wait for the full budget presentation after the formation of the new government.Urgency in addressing consumption downturnExperts stress the urgency in addressing issues related to a slowdown in consumption demand. Rajat Wahi, Partner at Deloitte India, highlights the impact of rising input costs on consumer goods prices, especially affecting the lower-income segments, both in rural and urban areas. Loan defaults have surged among the economically vulnerable, indicating the severity of the situation.Agriculture sector concernsThe agriculture sector, a critical component of Indias economic landscape, faces challenges in achieving the envisioned growth. Wahi points out that inflation has hindered the governments goal of doubling agricultural income, with growth expected to decelerate to 1.8% in the current fiscal year, down from 4% in 2022-23.Vote-on-account to secure fundsWhile the primary purpose of a vote-on-account is to secure funds for essential expenditures for the initial four months of the next fiscal year, experts, including Devendra Kumar Pant, Chief Economist at India Ratings & Research, emphasise the need for timely intervention. If certain sections of society are under stress, waiting for 4-5 months may exacerbate the situation. The interim budget could include interventions aimed at supporting vulnerable sections of the population.
