The upcoming budget set to be revealed on February 1 by Finance Minister Nirmala Sitharaman is going to be an interim budget owing to the elections ahead.
The finance minister has already mentioned that the Fiscal Budget 2024-25 will not have any major announcements and will just focus on the expenditure of the government until a new government takes over after the general elections. However, pre-budget expectations are on the rise. Gurmeet Singh Chawla, Director of Master Capital Services Ltd., shares insights into the anticipated fiscal plans of the government.
As India gears up for the Lok Sabha elections projected for April to May 2024, the upcoming budget is expected to be more of an interim nature, with no major policy declarations on the cards.
6 key developments
- Forecasts suggest that the government is poised to increase welfare spending and potentially target a reduction in the fiscal deficit to 4.5% of the GDP by the financial year 2025-26. “Anticipations are high that the government will increase welfare spending and potentially aim to decrease the fiscal deficit to 4.5% of the GDP by FY26,” Chawla said.
- He further mentioned that people are hoping for the government to announce plans to reduce taxes and provide support for farming and rural areas while focusing on capex.
- A greater allocation of funds to the infrastructure segment is expected, with a particular emphasis on fostering the growth of a digitised India, green hydrogen, electric vehicles (EVs), and broadband.
- For the upcoming fiscal year, India is contemplating allocating around Rs 4 trillion ($48 billion) for food and fertiliser subsidies. “The Ministry of Consumer Affairs, Food, and Public Distribution has forecasted a food subsidy expenditure of $26.52 billion for FY25, indicating a 10 per cent rise from the anticipated allocation of nearly $24.11 billion in FY24,” he said.
- indications or signals are showing that the government might increase the money (funding) for affordable housing by more than 15 per cent. He mentioned that this increase could make the total amount of money for affordable housing reach Rs 1 trillion (which is equal to $12 billion) for the financial year 2024-2025.
- Additionally, the government has set a goal to raise Rs 510 billion (equal to $6 billion) through divestment, which means selling some of its assets or investments.
