IMF Executive Director on Budget 2024: Finance Minister Nirmala Sitharaman, clad in a blue saree, presented her maiden interim budget 2024; the thrust as expected was on capex and on fiscal consolidation. In a post budget exclusive interview with Republic Business, KV Subramanian, and Executive Director of International Monetary Fund (IMF) coined an acronym of JNV - Judicial, Non Populist, and Visionary, to capture the essence of the interim budget.

According to Subramanian, this budget was judicial on fiscal front, non populist as the government refrained from announcing any big-bang reform, and visionary as few steps of the budget were taken to lay the path for Amrit Kaal or New India.

“In my sense, Rs 1 lakh crore of interest free loans to states for innovations and R&D was a visionary move. This gladdens my heart,” Subramanian told Republic Business.  He believes that long term financing for innovation is the need of the hour.

On Capex

Sitharaman pushing the pedal on Capex to push India’s growth allocated Rs 11.1 lakh crore, against Rs 10 lakh crore allocated in FY24. The capex allocation in FY25 witnessed growth of 11.1 per cent when compared to last year.

“I would have wanted it to be higher. Ideally, I would have wanted 20 per cent capex growth in FY25. But even 11 per cent growth in capex is important as it is coming on the back of a 35 per cent cumulative increase over the last few years,” Subramanian said.

On achievement of fiscal targets

FM Sitharaman highlighted that the revised fiscal deficit in FY24 stood at 5.8 per cent, and the estimated fiscal deficit target for FY25 is 5.1 per cent.

“I think this government is known for under-promising and over delivering on the fiscal front.  As far as my sense goes, I think when the final fiscal deficit number for FY24 will be released it will be 5.7 per cent considering the actual revised estimate on revenue is lower than the run rate so far,” he opined.

According to him, estimated revenue growth and gross nominal GDP growth are conservative in nature. Subramanian said further, “In my sense, real growth will be 7 per cent, GDP Deflator will be 4 per cent, and nominal GDP growth would be somewhere around 11.3 per cent.”

Talking about his own estimate, he added, “Even if we will see conservative tax buoyancy of 1.2 per cent, revenue growth is estimated to be 13.5 per cent, against the government estimate of 11.9 per cent growth. This means that achieving the target of 5.1 per cent in FY25."

“In fact the target to reach fiscal deficit at 4.5 per cent by FY26 is absolutely possible to achieve,” he said.

At the end, the IMF executive director wished for more capex allocations going forward and dubbed the sentiment around the budget and the economy in one word that is - "Positivity."