Union Finance Minister Nirmala Sitharaman is going to present the budget for 2024-25 in the Lok Sabha on July 23. The budget for 2024-25 is going to be the first major economic document of the Modi 3.0 government. It is likely to prepare a road map to make India a developed nation by the year 2047. Apart from this, many things will also be considered in it. Many experts have urged the government to provide tax relief to the common man to promote consumption. Steps should be taken to curb inflation and accelerate economic growth.
There were no significant changes in taxation policies in the last two budgets except making the new tax regime the default option and introducing the standard deduction facility. On July 11, Prime Minister Narendra Modi met top economists, where he laid a renewed emphasis on jobs as well as boosting manufacturing and rural business. He also spoke of the complexities of centre-state relations, particularly the Centre funding multiple programmes or schemes and the states not taking full accountability for their implementation on the ground, as reported by The Indian Express.
Economic analysts said possible steps to boost jobs and incomes could be taken as growth in the economy remains uneven and food prices continue to jump. Modi's party lost last month's general election by less than half the votes it got as the loss of jobs and the high cost of living overshadowed his high-voltage Hindu nationalist campaign. To stay in power, Modi relies on two unstable regional allies, the Telugu Desam Party (TDP) and the Janata Dal (United), which control the states of Andhra Pradesh and Bihar respectively. Finance Minister Nirmala Sitharaman will present the first budget of the Modi government's third term on July 23, providing the first glimpse of any changes in the government's economic policies.
The new budget will replace the interim budget estimates for the fiscal year 2024/25 that began on April 1. “We think the budget will strike a balance between economic and political imperatives,” said Shreya Sodhani, regional economist at Barclays. “This would mean the government will use the windfall from RBI dividends and higher tax revenues to spend more rather than reduce the deficit,” Sodhani said, referring to the central bank, the Reserve Bank of India. A record $25 billion surplus transfer from the central bank would give the government more scope to spend without widening the deficit. Most economists polled by Reuters said the fiscal deficit target would be retained at 5.1% of GDP.
Over the past three years, the government has nearly doubled spending on long-term infrastructure projects to boost growth and job creation. It plans to spend 11 trillion Indian rupees ($131.61 billion) on such projects this year, and some economists expect the budget to give an additional boost to manufacturing. “We expect the government to maintain its focus on boosting domestic manufacturing,” Nomura economists said in a note. They added that they expect an increase in local procurement requirements and an extension of the concessional tax rate for new manufacturing facilities. The government is also expected to bring in consumption-boosting measures that were not in the interim budget presented before the election. According to a Reuters report, the upcoming budget may include a reduction in personal income tax for some categories. “The Indian middle class is supporting Modi with great determination. But they have not received much relief for many years,” says political analyst Rashid Kidwai. “It's time for the government to give them some kind of relief.” Additionally, the South Asian nation may increase state subsidies on rural housing and food.
