Interim Budget 2024: In the backdrop of the upcoming interim budget for 2024, anticipation is building around key areas of emphasis that the government might prioritise. With the looming Lok Sabha elections, this budget is set to be a vote-on-account, paving the way for a comprehensive budget post-electoral verdict. Finance Minister Nirmala Sitharaman's address on February 1, 2024, is expected to outline crucial aspects that could impact India's economic trajectory.

Fiscal consolidation: A pragmatic approach

Chief Economist and Head of Research at Acute Rating, Suman Chowdhary, highlights fiscal consolidation as a key focus. With the government aiming for a fiscal deficit close to 6 per cent of GDP in the current fiscal, the anticipation is that it will target a reduction to around 5.3 per cent in FY25. This move signifies a concerted effort to revert to the pre-COVID path of fiscal consolidation, signaling a commitment to prudent fiscal policies.

Quality of fiscal expenditure: Strengthening capex

Chowdhary underscores the government's increasing focus on the quality of fiscal expenditure, particularly in the domain of capital expenditure (Capex). Over the past few years, the Capex budget has steadily risen, reaching around ten lakh crores in the current fiscal year. While sustaining the same level of growth might be challenging, there is an expectation of a continued emphasis on infrastructure development. This aligns with the broader strategy of driving economic growth through robust and strategic investments.

Farmer welfare: Addressing rural distress

Recognising the challenges faced by certain segments of the economy, particularly in rural areas, the government is likely to introduce measures to alleviate stress. The impact of factors such as the El Nino phenomenon and lower-than-expected crop output has hindered rural income growth. To address these concerns, additional relief measures for farmers are expected. Chowdhary suggests the possibility of enhancing programs like PM Kisan or MGNREGA, offering support to unemployed youth, women from weaker sections, and even tribal communities.

Green finance for a sustainable future

In a nod to environmental sustainability, the government is anticipated to convey its seriousness about green finance projects. Suman Chowdhary says there could be announcements on easier access to green financing and possibly the introduction of green bonds. Despite the domestic market's slow adoption of green bonds, there is optimism that the government will actively promote these instruments to spur investments in environmentally friendly initiatives.