Finance Minister Nirmala Sitharaman will be presenting the pre-election Budget which would list out achievements of the Modi government in the past 10 years, while giving a glimpse of the future plans to make India a developed nation by 2047.
All eyes will be on whether Sitharaman will deliver a populist budget leaving more money in hands of the common man or push the reform agenda by staying on the fiscal glide path to lower the fiscal deficit to 4.5 per cent of GDP by 2025-26.
Sitharaman, who would be presenting her sixth straight budget, had in her first Budget in 2019 replaced the leather briefcase — which had been in use for decades for carrying budget documents — with a traditional ‘bahi-khata’ wrapped in red cloth. This year’s Budget would be in paperless form, as done in the last three years.
Here are the key numbers to watch for in pre-election Budget 2024-25.
IMAGE: Finance Minister Nirmala Sitharaman reaches Parliament to present the pre-election budget.
Fiscal Deficit
The budgeted fiscal deficit, which is the difference between the government expenditure and income, for the current fiscal ending March 2024 is 5.9 per cent, against 6.4 per cent in the last fiscal. The number for 2024-25 would be in focus as it is widely expected that the government would open its purse strings in an election year.
The budgeted fiscal deficit of 5.9 per cent of gross domestic product (GDP) for the current fiscal is likely to be achieved, but it is nearly twice the Fiscal Responsibility and Budget Management Act (FRBMA) fiscal deficit to the GDP target of 3 per cent for the central government. Correspondingly, the debt-GDP ratio at 54 per cent is also well above the target of 40 per cent.
Disinvestment/Privatisation
In current fiscal year the budgeted disinvestment target is likely to be missed, like the past five years. It is expected the government would set a realistic target of sub-Rs 50,000 crore for next fiscal.
Capital Expenditure
The government’s planned capital expenditure for this fiscal year is budgeted at Rs 10 lakh crore, higher than Rs 7.3 lakh crore in the last fiscal. The government has been pushing infrastructure creation and also incentivising states to step up capex.
Tax Revenue
The Budget had pegged direct and indirect tax mop-up at Rs 18.23 lakh crore and Rs 15.29 lakh crore for current fiscal, taking the gross tax collection to Rs 33.61 lakh crore. The government’s tax revenues are expected to overshoot the budget estimates on buoyant collections in GST; and income and corporate tax.
Borrowing
The government’s gross borrowing budget was at Rs 15.43 lakh crore in the current financial year ending March 31. The government borrows from the market to fund its fiscal deficit. The borrowing number would be watched by the market, especially on the back of expected higher capital expenditures to boost growth and populist announcements.
Nominal GDP
India’s nominal GDP growth (real GDP plus inflation) in the current fiscal is estimated to be 11 per cent. The Budget is expected to give an outline on the nominal GDP growth numbers. Real GDP growth in current fiscal is projected at 7.3 per cent and 7 per cent in the next.
Spotlight would also be on spending on key schemes, like NREGA, as well as key sectors like health and education.
