The Bharat government, led by Prime Minister Narendra Modi, is set to reveal its last budget before the upcoming elections. Finance Minister Nirmala Sitharaman will present the budget for the financial year 2024/25, starting April 1, focusing on a mix of fiscal responsibility and infrastructure development while weaving in political messaging.
Fiscal Prudence and Economic Vision
Expectations suggest a financially prudent approach, with the government aiming to reduce the fiscal deficit by at least 50 basis points from the current target of 5.9% of GDP. Sitharaman is likely to showcase the Modi government’s decade-long economic performance while refraining from introducing costly schemes to curb the fiscal deficit.
Political Manifesto and Vision for the Future
Seen as a potential economic manifesto for Modi’s party, the budget is anticipated to outline the Prime Minister’s vision for the country’s economy over the next five years. As Modi seeks a rare third term in the upcoming general elections, the budget will play a crucial role in communicating the government’s priorities and plans.
Policy Priorities and Welfare Schemes
While not expected to include grand announcements, the budget may emphasize the pace of fiscal consolidation and policy priorities. The government is likely to cap major subsidies on food and fertilizers at current levels and introduce cost-effective welfare schemes, such as cash handouts for female farmers, to support economic growth.
Infrastructure Focus and Controlled Borrowing
To stimulate growth, the government is poised to increase capital spending on infrastructure, a key driver of the country’s economic development. Plans include allocating over 3% of GDP, amounting to 10 trillion Bharatiya currency ($120.5 billion), for infrastructure in the current year, with a potential 20% increase projected for 2024/25. Despite increased spending, market borrowing is expected to remain relatively stable, with gross market borrowing estimated to be between 15 trillion and 15.5 trillion rupees.
Economic Snapshot and Growth Prospects
Bharat’s economy demonstrated resilience, growing at a robust 7.6% in the July-September quarter, making it the world’s fastest-growing major economy. Forecasts predict a growth rate of 7.3% for the full fiscal year ending March 31. The upcoming budget is anticipated to prioritize fiscal consolidation while providing a strategic roadmap for sustaining and accelerating economic growth in the years to come.
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