The budget of the world’s fastest-growing economy: the key numbers to watch

Finance Minister Nirmala Sitharaman will present a pre-election budget that will list the achievements of the Modi government over the past 10 years while outlining India’s future plans to become a developed country by 2047. All eyes will be on: Will Sitharaman deliver a populist budget that puts more money in the hands of common people, or push for a reform agenda by maintaining a fiscal glide path to reduce the fiscal deficit to 4.5% of GDP.

Sitharaman will present her sixth consecutive budget, having replaced the leather briefcase used to carry budget documents for decades with a traditional “bahi-khata” wrapped in red cloth in her first budget in 2019. As with the past three years, this year’s budget will be paperless.

Here are the key numbers to watch in the 2024-25 pre-election budget:

• Fiscal deficit: The budget fiscal deficit, the difference between government spending and revenue, is 5.9% in the current fiscal year ending March 2024, compared with 6.4% in the previous fiscal year. The 2024-25 numbers will be in focus as the government is widely expected to liberalize its finances in an election year. The budget deficit target of 5.9% of gross domestic product (GDP) for the current fiscal year is likely to be achieved, but it is almost double the Fiscal Responsibility and Budget Management Act (FRBMA) fiscal deficit target of 3% of GDP for the central government. Correspondingly, the debt-to-GDP ratio is 54%, which is also well above the 40% target.
• Disinvestment/Privatization: As in the past five years, the budgeted disinvestment target may not be achieved this fiscal year. The government is expected to set a realistic target of less than Rs 50,000 crore for the next fiscal year.
• Capital expenditure: The government’s planned capital expenditure budget for this fiscal year is Rs 1,000 crore, up from Rs 7.3 billion in the previous fiscal year. The government has been pushing for infrastructure and incentivizing states to step up capital spending. * Tax collection: The budget puts the direct and indirect tax sweep for the current fiscal at Rs 1,823 crore and Rs 1,529 crore, taking the total tax collection to Rs 3,361 crore. The government’s tax revenue is expected to exceed budget estimates due to brisk collections from goods and services tax (GST); as well as income tax and corporate tax.
• Borrowing: The government’s total borrowing budget for the current fiscal year ended March 31 is Rs 1,543 crore. The government borrows from the market to finance its fiscal deficit. Markets will keep a close eye on borrowing volumes, especially amid expectations of increased capital spending to boost growth and populist statements. * Nominal GDP: India’s nominal GDP growth (real GDP plus inflation) is expected to be 11% for the current financial year. The budget is expected to give an overview of nominal GDP growth figures. The real GDP growth rate for this fiscal year is expected to be 7.3%, and the real GDP growth rate for the next fiscal year is 7%.
• The focus will also be on key schemes like NREGA and spending on key sectors like health and education.

(This story has not been edited by News18 staff and is published from associated news agency – PTI)