Pragmatic Budget

THE interim Budget presented by Finance Minister Nirmala Sitharaman ahead of the General Election bears the stamp of a government that seems confident of getting another term and is looking at the long-term picture. Priority has been given to fiscal consolidation and capital expenditure, even as populism has taken a back seat. The fiscal deficit target for 2024-25 has been pegged at 5.1 per cent of the gross domestic product (GDP); in 2023-24, the corresponding figure was 5.9 per cent, which was downwardly revised to 5.8 per cent. Fiscal deficit, described as the difference between the government’s total revenue and total expenditure, is an indicator of the borrowings that the Centre may need. The government is keen on bringing it below 4.5 per cent of the GDP by the 2025-26 financial year.

A hike of 11.1 per cent in the capital expenditure outlay has been proposed. The allocation will rise to Rs 11.11 lakh crore in 2024-25, accounting for 3.4 per cent of the GDP, compared to Rs 10 lakh crore in 2023-24. The capex push is an integral element of the government’s roadmap to spur growth and achieve the goal of Viksit Bharat (developed India) by integrating infrastructure development with employment generation.

In terms of allocation, the Defence Ministry (Rs 6.2 lakh crore) is at the top, while the Ministry of Agriculture and Farmers’ Welfare (Rs 1.27 lakh crore) has ended up below several ministries. The interim Budget has given no fresh impetus to the farming sector, with the government mainly confining itself to reiterating how successful its existing schemes have been. Tax relief has eluded the middle class as various slabs have been left unchanged. It’s clear that the government is bent on maintaining the momentum generated by high tax collections, which have more than doubled over the past decade, as per the FM. Largely devoid of big-bang announcements, the interim Budget sums up the government’s self-assurance, which its detractors might construe as complacency.

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