Finance Minister Nirmala Sitharaman is likely to conduct the upcoming pre-budget consultations with industry stakeholders on Thursday, June 20, 2024. The budget for 2024-25 fiscal is likely to be presented in Parliament in the second half of July. Industry sources told news agency PTI that the pre-budget consultation with the finance minister would be preceded by an official meeting with the Revenue Secretary on Tuesday, June 18.
The 2024-25 Budget will likely lay out Modi 3.0 government’s economic agenda. Sitharaman will have to look at measures to boost growth without hurting inflation and look for resources to meet the coalition government’s compulsion. The economic agenda would include steps to fast-rack reforms to turn India into a $5-trillion economy in the near future and a ‘Viksit Bharat’ by 2047.
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The Indian economy is projected to grow 7.2 per cent in FY25 on the back of improving rural demand and moderating inflation, according to recent estimates by the Reserve Bank of India (RBI). The Modi 3.0 government inherits a strong economy with fiscal prudence in place with a special advantage as the RBI had announced the highest-ever dividend of ₹2.11 lakh crore for FY24.
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The key policy priorities for the third term of Prime Minister Narendra Modi-led government would include dealing with food inflation, unemployment, stress in the agriculture sector, job creation, sustaining capex momentum and pushing revenue growth to stay on the fiscal consolidation path.
Rating agency S&P has maintained a positive stance on the economic policies followed by the Modi regime in the past 10 years. The agency had upgraded the sovereign rating outlook to positive. It also hinted at a possible rating upgrade in next 1-2 years provided the government sticks to its fiscal deficit roadmap.
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While tax revenues seem to be buoyant, non-tax revenue remains a challenge as the strategic disinvestment has almost been a non-starter with no big-ticket strategic sale, except Air India. Analysts also expect some new changes in the income tax regime for the tax-paying salaried employees.
“A key area of focus will be to generate jobs, especially in the rural economy. Consequently, the final budget is anticipated to feature increased government expenditure in areas such as MGNREGA, housing, water, and agriculture. Simultaneously, the government will maintain its pro-industrial policy to encourage private investments,” said Vinod Nair, Head of Research, Geojit Financial Services.
To support private investment, analysts expect that that PLI schemes will be expanded and include additional sectors, particularly those that are labour-intensive. With youth employment being a critical need, significant government capex and increased funding for MSMEs and startups are anticipated.
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Increasing the MSP or providing price guarantees, along with removing export bans on agricultural products such as onions, wheat, and sugar, will be advantageous. ‘’In the near term, agricultural productivity may decline due to the heat wave in the north, necessitating government support. However, an uplift in monsoons and heatwaves is forecast in FY25 compared to below normal in FY24, which will lead to a reversal in fortunes,” added Nair.
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Published: 16 Jun 2024, 09:51 PM IST
