Interim Union Budget 2024: Finance Minister Nirmala Sitharaman is set to present the Interim Union Budget for the financial year 2024-25 on Thursday, February 1, in the second term of the Narendra Modi government. The budget is anticipated to focus on fiscal prudence, emphasizing infrastructure spending and delivering political messages in the run-up to the Lok Sabha elections. Sitharaman is likely to showcase the economic achievements of Modi’s government over the past decade while avoiding extravagant schemes to reduce the fiscal deficit.
As Modi eyes a third term, the Interim Budget is expected to serve as an economic manifesto for the Bharatiya Janata Party, outlining the vision for the country’s economy in the next five years. The budget will likely be a mix of prudent financial measures and targeted incentives for sectors such as agriculture to generate employment and boost consumption.
Despite recent electoral victories in states like Rajasthan, Madhya Pradesh, and Chhattisgarh, the government is expected to maintain fiscal responsibility. While no major announcements are anticipated, economists will closely watch the pace of fiscal consolidation and the government’s policy priorities.
The government aims to lower the fiscal deficit by at least 50 basis points in 2024-25, with potential caps on major subsidies for food and fertilizers. Infrastructure spending is expected to receive a boost, with over 3% of GDP allocated in the current year and a further increase of up to 20% projected for 2024-25.
The Indian economy is forecasted to grow close to 7% in the upcoming financial year, with projections suggesting India could become the third-largest global economy with a GDP of USD 5 trillion in the next three years.
Expectations from the budget include an increase in income tax exemption limits, support for women entrepreneurs, and measures to boost consumption and savings. Calls for parity in taxation among different business entities and a long-term taxation policy are also prevalent.
In sectors like hospitality and MSMEs, hopes are high for a more lenient tax structure and increased budget allocations to support recovery from the impacts of the COVID-19 pandemic. As the 2024-25 Budget is interim, the focus is on maintaining policy continuity, especially in areas like rural growth, investment, and inclusive development. The budget is anticipated to address near-term risks with modest pro-demand measures, similar to the pre-election 2019 Budget.
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