Budget 2024 Date – budget 2024 expectations
Updates: Emphasis on infrastructure capital expenditure, jobs, new income tax regime, and income tax slabs
Union budget 2024: Things that matter – केंद्रीय बजट 2024: वो बातें जो मायने रखती हैं
Budget 2024: The Union Budget of today seeks to achieve a careful balance between three important issues. First and foremost, attaining a more noticeable fiscal consolidation is the main goal. Second, the administration wants to allocate funds for social spending, particularly in light of the approaching general elections. Thirdly, maintaining the tempo of capital spending to improve physical infrastructure is emphasized.
Although large announcements are generally avoided in interim budgets, based on the 2018–19 interim budget, we expect substantial funding for targeted welfare spending. These are anticipated to cover topics like youth and women’s welfare, rural development, and assistance for MSMEs (micro, small, and medium-sized enterprises). Concurrently, growth in capital expenditures is expected to stay strong enough in the upcoming fiscal year (2024–25), despite being slower than in the previous several years. The framework for all of these initiatives is a push toward fiscal consolidation, with the goal of keeping the fiscal deficit to GDP ratio at or below 5.4 percent.
Amidst the Union budget statement of 2021–22, the administration has unwaveringly committed to achieving a budgetary deficit of less than 4.5 percent by 2025–26. The current aim notwithstanding, the budget deficit in 2023–2024 is 5.9 percent; so, a 1.4 percentage point reduction in deficit is required by 2025–2026. The widespread use of expansionary fiscal policies around the world may encourage a postponement of fiscal consolidation. But with India’s fiscal measures less favorable than those of other big nations, it becomes even more important to stick to the targets, especially since Indian government securities are part of global bond indices.
Although controlling debt and deficit would help keep borrowing and interest costs under control, debt sustainability is not the main issue. The amount borrowed by the government has doubled from pre-Covid levels, with an estimated gross borrowing of around Rs 15.8 trillion in the budget for 2024–2025. Furthermore, the Center’s interest payments have increased to about 40% of overall revenue, underscoring the need for financial restraint.
There are still obstacles in the way, even with direct tax collections rising sharply due to increased compliance and strong corporate profit growth. Direct tax buoyancy may decrease if formal job creation slows down and corporate profitability growth slows down. The goal of a 4.5 percent fiscal deficit by 2025–2026 signifies a return to the levels observed in 2019–20.
A careful analysis of spending indicates that, in order to meet this fiscal objective, overall spending must rise from 13.4% of GDP in 2019–20 to 15.3% of GDP this year. A significant decrease in revenue expenditure as a percentage of GDP is necessary to turn the deficit around to 4.5 percent while keeping capital expenditure levels at current levels. This suggests that while capital expenditure growth should only slightly outpace nominal GDP growth over the medium term, revenue expenditure growth must be slower than nominal GDP growth.
In order to buck the recent trend of declining consumption over the last few quarters, the budget might look into ways to increase welfare spending. Trade restrictions may provide support to the agriculture and rural sectors, with a focus on MSMEs, women’s welfare, and youth. However, the necessity of controlled revenue expenditure growth places restrictions on significant populist spending.
Over the last few years, the government has been able to successfully raise the standard of spending, especially when it comes to capital expenditures that emphasize supply-side initiatives. It is becoming difficult to maintain this rate of capital expenditure, and the next budget may show a decrease in growth. This change makes room for significant increases in spending in areas that are vital to the country’s general development, such housing, roads, railroads, and defense.
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FAQ’s Question And Answer: Union budget 2024
Here are some general knowledge questions related to the article, along with their answers:
1.Question: What are the three key priorities mentioned in the article regarding the Union Budget?
Answer: The three key priorities are fiscal consolidation, welfare expenditures, and sustaining capital expenditure.
2.Question: According to the article, what is the fiscal deficit target set by the government for 2025-26?
Answer: The fiscal deficit target for 2025-26 is below 4.5 percent, as mentioned in the 2021-22 Union budget speech.
3.Question: What is the expected gross borrowing in the government’s 2024-25 budget, as per the article?
Answer: The article mentions an expected gross borrowing of around Rs 15.8 trillion in the 2024-25 budget.
4.Question: Why is adherence to fiscal targets considered important, according to the article?
Answer: Adherence to fiscal targets is crucial due to the inclusion of Indian government securities in global bond indices, putting the fiscal under greater scrutiny.
5.Question: What are the constraints mentioned in the article regarding meaningful populist expenditure?
Answer: Constraints on meaningful populist expenditure include the need for disciplined revenue expenditure growth, especially with the fiscal consolidation push.
6.Question: Which sectors are highlighted in the article as potential focus areas for decently high spending growth in the upcoming budget?
Answer: The highlighted sectors for potential spending growth include defense, housing, railways, and roads, crucial for overall national development.
7.Question: What is the current debt/GDP ratio, as mentioned in the article?
Answer: The article mentions that the current debt/GDP ratio is around 56-57 percent.
8.Question: According to the article, what has been a positive aspect of the Centre’s fiscal situation in recent times?
Answer: The positive aspect mentioned is the buoyancy in direct tax revenues, likely around 1.9 percent in the current year.
9.Question: What is the challenge discussed in the article regarding direct taxes buoyancy for the next year?
Answer: The challenge is that direct taxes buoyancy may be lower next year due to an expected slowdown in corporate earnings growth and weakened job creation.
10.Question: In order to achieve a fiscal deficit of 4.5 percent, what does the article suggest needs to happen to revenue expenditure as a proportion of GDP?
Answer: The article suggests that revenue expenditure growth needs to be slower than nominal GDP growth to achieve the fiscal deficit target
11.Question: What is the fiscal deficit percentage in the year 2023-24, as mentioned in the article?
Answer: The fiscal deficit is mentioned to be at 5.9 percent in the year 2023-24.
12,Question: Why does the article suggest the government might be tempted to defer fiscal consolidation despite the challenges?
Answer: The article suggests that the global prevalence of expansionary fiscal policies might tempt the government to defer fiscal consolidation.
13.Question: According to the article, what is the contribution of interest payments to the Centre’s total receipts?
Answer: Interest payments contribute to around 40 percent of the Centre’s total receipts, up from around 35 percent pre-Covid.
14.Question: What is the expected growth rate of corporate earnings mentioned in the article for the next year?
Answer: The article anticipates a slowdown in corporate earnings growth to around 11 percent for the next year.
15.Question: Why is the inclusion of Indian government securities in global bond indices significant, according to the article?
Answer: The inclusion of Indian government securities in global bond indices puts the fiscal under greater scrutiny.
16.Question: What sectors does the article identify as crucial for overall national development in the context of potential spending growth?
Answer: The identified sectors for potential spending growth are defense, housing, railways, and roads.
17.Question: What has been the key driver for GDP growth in recent times, as per the article?
Answer: Investments, driven by government spending, have been the main driver for GDP growth in recent times.
18.Question: What is the expected growth rate of consumption over the past four quarters, as mentioned in the article?
Answer: Consumption has been on a weak footing, averaging a growth of 3.5 percent over the past four quarters.
19.Question: According to the article, what is the government’s targeted fiscal deficit by the year 2025-26?
Answer: The government has targeted a fiscal deficit of below 4.5 percent by the year 2025-26.
20.Question: What does the article suggest is a commendable aspect of the government’s fiscal management over the past few years?
Answer: The article suggests that the government has done a commendable job in improving the quality of expenditure, particularly through supply-side measures like capital expenditure.
