On July 23, Union Finance Minister Nirmala Sitharaman will announce Union Budget 2024-2025 which will set the agenda for Narendra Modi 3.0, The Bugdet is set against Rs 2 lakh crores unexpected bonanza from RBI which can be used for capital expenditure or fiscal deficit management.
Following are some key pointers to watch out in the Budget:
- Populist or prudential—This time, the coalition pressure will be evident. Major allies of BJP Nitish Kumar and Chandra Babu Naidu have already raised demands such as special status for Bihar and Andhra Pradesh.
- Job creation—what can the budget do? The Commerce Ministry has set an ambitious yet achievable target of US$2 trillion in exports by 2030 with a focus on labour-intensive sectors such as textile, electronics, agriculture, and food processing.
- Tax changes –What is expected of every budget – one would expect relief for the middle class in terms of raising the taxable income threshold and rationalisation of GST slabs. Indian corporations and foreign investors will expect further simplification of tax laws relating to tax deducted at source (TDS), capital gain, and angel tax, etc.
- Banking Sector–Will the FM step on the reforms pedal by initiating the bank privatisation bid? The privatisation of IDBI Bank is already underway. There are rumors of a few other banks coming up next for government stake sale. Will there be action this time?
Some numbers:
Fiscal deficit:
- The fiscal deficit target of 5.1% of GDP in FY25 set in the interim budget is on track to be met, positioning us to achieve 4.5% of GDP in FY26.
Inflation:
- While core inflation has come down, food inflation remains elevated. With the expectations of a normal monsoon, prices of vegetables are expected to come down and hence cool off food inflation.
The RBI has set the FY 25 inflation target at 4.5%. India’s retail inflation rose to four-month high of 5.08 percent in June compared with 4.75 percent in the previous month as food inflation galloped to 9.4 percent given the impact of heatwave on vegetables.
Agriculture: Credit target for FY25 may be raised to Rs25 lakh crores.