With the Union Budget 2024-25 set for presentation on Tuesday, expectations are high that Finance Minister Nirmala Sitharaman may introduce populist measures to boost the rural economy and job creation. Upcoming elections in Maharashtra, Haryana, Jharkhand, and Delhi add to the likelihood of voter-friendly announcements.
Economic stability and spending leeway
Experts believe the government has room for additional spending without significantly increasing the capital expenditure bill. The FICCI Economic Outlook Survey highlighted that prudent fiscal management has created headroom for increased social sector spending, especially in rural areas. Analysts at Macquarie estimated a possible Rs 1.5 lakh crore in extra expenditure, maintaining the fiscal deficit target of 5.1% for FY25.
Key macroeconomic data
- GDP growth: India's economy is expected to grow at around 7% this fiscal year, supported by robust tax collections and a controlled fiscal deficit. The RBI projects a 7.2% growth rate, with the IMF and ADB also forecasting strong growth.
- Tax collections: Healthy tax collections have marked the first quarter, with net direct taxes growing by 19.54% and gross GST collections reaching Rs 1.74 lakh crore in June. The Interim Budget set ambitious targets for FY25, building on this strong performance.
- Fiscal deficit: The fiscal deficit target is pegged at 5.1% for FY25. The previous fiscal saw a better-than-expected performance at 5.6%, thanks to a substantial RBI dividend. This trend of fiscal consolidation is likely to continue.
- Inflation: Retail inflation surged to 5.1% in June, driven by food prices, while wholesale inflation hit a 22-month high of 3.4%. Analysts expect inflation to average around 4.5% for the fiscal year, aligning with RBI projections.
- Exports: Subdued global growth has impacted India's export performance. While merchandise exports are targeted to reach $800 billion, growth has been modest, with a 2.55% increase in June. Imports grew faster, widening the trade deficit to $21 billion.
The Union Budget is anticipated to address these economic indicators, balancing fiscal prudence with targeted spending to support growth and stability.
Also read | Budget 2024: Key facts to know ahead of Finance Minister Nirmala Sitharaman's 7th consecutive Budget
Latest Business News
