The Finance Minister, Nirmala Sitharaman, has confirmed that the upcoming budget, scheduled to be unveiled on February 1, will be an interim budget due to the upcoming elections. This means that the budget will primarily focus on the government’s expenditure until a new government assumes power after the general elections. Despite this, there is growing anticipation and speculation regarding the fiscal plans of the government before the budget is announced. Gurmeet Singh Chawla, the Director of Master Capital Services Ltd., provides valuable insights into the expected fiscal strategies of the government.
As India prepares for the Lok Sabha elections scheduled for April to May 2024, the forthcoming budget is anticipated to have an interim nature, devoid of any significant policy announcements on the horizon.
Anticipating 6 key developments
- Chawla stated that there is a strong expectation that the government will boost welfare spending and potentially strive to lower the fiscal deficit to 4.5% of the GDP by the financial year 2025-26.
- He additionally stated that individuals are anticipating the government to declare strategies to decrease taxes and offer assistance for agriculture and rural regions, all while prioritizing capital expenditure. “This industry faced immediate obstacles like unfavorable weather conditions, the consequences of climate change, and inflationary pressures. It is anticipated that government expenditure on capital expenditure will rise to counteract global growth concerns,” he remarked.
- It is anticipated that there will be an increased allocation of funds towards the infrastructure sector, with a specific focus on promoting the development of a digitalized India, green hydrogen, electric vehicles (EVs), and broadband.
- The Ministry of Consumer Affairs, Food, and Public Distribution has projected that the food subsidy expenditure for FY25 will amount to $26.52 billion, reflecting a 10 percent increase compared to the expected allocation of approximately $24.11 billion in FY24.
- There are signs or indications suggesting that the government could potentially raise the funding for affordable housing by over 15 percent. He stated that this increment has the potential to elevate the overall amount of money allocated for affordable housing to Rs 1 trillion (equivalent to $12 billion) for the fiscal year 2024-2025.
- Furthermore, the government aims to generate a sum of Rs 510 billion (equivalent to $6 billion) through divestment, which entails the sale of certain assets or investments.