“Finance Minister Nirmala Sitharaman Gears Up for Sixth Consecutive Budget with Focus on Fiscal Prudence and Targeted Incentives”

In a crucial move ahead of the upcoming general elections, Finance Minister Nirmala Sitharaman is poised to present the last budget of the Modi 2.0 government. Expected to be a strategic blend of economic measures and targeted initiatives, this marks Sitharaman’s sixth consecutive budget presentation, emphasizing the government’s achievements over the past decade.

Despite recent victories in three states reducing pressure for populist measures, Sitharaman is anticipated to uphold fiscal prudence while providing key incentives for sectors vital to the economy, such as agriculture. The primary goal is to stimulate job creation and bolster consumption.

Technically termed a “vote on account,” the budget seeks Parliament’s approval for essential expenditures for the initial four months of the upcoming fiscal year, starting in April. While traditionally, interim budgets avoid major policy announcements, past governments have made significant moves, such as the introduction of a cash dole for farmers in the 2019 interim budget.

This year’s budget is expected to steer the focus towards infrastructure, deviating from the trend of spending on new populist measures. It provides a unique opportunity to assess the fiscal health of the economy against the backdrop of robust economic growth and lay out a roadmap for achieving targets set by the Fiscal Responsibility and Budget Management (FRBM) Act.

The current fiscal year’s budgeted deficit of 5.9% of GDP is projected to be achieved, albeit nearly double the FRBM target of 3%. Experts note that sustaining nominal GDP growth at 10.5% may take up to 13 years to reach a debt-GDP level of 40%.

To boost domestic private consumption, which is anticipated to show weak growth in FY24, the government is expected to allocate subsidies for farmers, women, informal sector workers, and unemployed youth. However, achieving targeted fiscal deficit reduction poses a challenge, necessitating a substantial increase in non-tax revenues, including disinvestments in Public Sector Undertakings (PSUs).

In this election year, the budget is anticipated to propose modest pro-demand measures, emphasizing an inclusive and prosperous policy push. The recent dominance of the Bharatiya Janata Party (BJP) in state elections reduces the likelihood of aggressive competitive populism compared to the pre-election budget of 2019. The budget presentation is keenly awaited as it sets the tone for the government’s economic priorities and strategies in the final stretch before the general elections.