Ahead of the upcoming elections in India, Prime Minister Narendra Modi is preparing for the country's final budget announcement. It's expected that Modi will introduce new spending plans to attract voters, all while ensuring the budget deficit doesn't increase too much.
India's economy has been growing quickly, which has resulted in more tax revenue for the government. This has helped the government manage its finances better, even during challenging times like the pandemic. Finance Minister Nirmala Sitharaman, who will present the budget on February 1, has room to continue investing in infrastructure and supporting key areas important to Modi, such as agriculture, women, the impoverished, and youth.
Here's a breakdown of what to look out for in the budget speech, which is usually delivered around 11 am in New Delhi.
Deficit and Borrowing: During the pandemic, India's deficit (the difference between what the government spends and what it earns) soared to 9.2% of the country's total economic output. Since then, the government has been working to bring it down to keep its debts in check. Economists expect the deficit for the current financial year, ending in March, to be around 5.9%, and they predict it will drop further to 5.3% in the next financial year.
Infrastructure Spending: Over the past three years, the government has significantly increased its spending on infrastructure like roads, ports, and power plants. This, combined with reforms in the financial sector and business, is projected to help the economy grow by 7% in the next fiscal year, and possibly even more in the years to come, as stated in the government's recent economic review.
Over the past three years, the government has significantly increased its annual capital expenditure by nearly one-third, focusing on investments in infrastructure such as roads, ports, and power plants. Coupled with robust financial sector and business reforms, these measures are expected to fuel a 7 percent growth in the economy in the upcoming fiscal year, with potential for even higher growth rates in subsequent years, as stated in the government's monthly economic review released on Monday.
Budget 2024 How PLI Schemes Impact Textiles, Food Processing, Pharma
Budget 2024 Expectations in Various Sectors: Auto, FMCG, IT, Agriculture, and More Await Wishlist