FULL marks must be given to the Finance Minister for crafting the Union Budget 2024-25 proposals in a manner that please all without deflecting from the path of fiscal prudence.
There are no freebies, no playing to the gallery and no populist measures that many expected of a coalition government. The Budget figures highlight the Government’s resolve to control the fiscal deficit. The FM announced a revised fiscal deficit target of 4.9 per cent of GDP for 2024-25, 20 basis points lower than the 5.1 per cent in the Interim Budget. For 2025-26, the aim is to reduce the deficit further to 4.5 per cent.
The Economic Survey, presented a day earlier, had noted reduction in India’s fiscal deficit from 6.4 per cent in 2022-23 to 5.6 per cent in 2023-24, driven by robust growth in direct and indirect taxes due to strong economic activity. Improved tax compliance also allowed the Government to collect more taxes than initially projected.
For the key Government allies – the JD (U) and the TDP – the Finance Minister had something special to offer. She announced significant financial measures as she unveiled major projects for Bihar and Andhra Pradesh, the states led by Nitish Kumar and Chandrababu Naidu, respectively, both vital supporters of the BJP-led Central Government. Sitharaman proposed over Rs 60,000 crore for various initiatives in Bihar, which faces Assembly elections next year and Rs 15,000 crore this fiscal year for developing Andhra Pradesh’s capital Amravati, a pet project of the new CM.
The Budget reflects a progressive approach with continued support for social welfare policies alongside a strong focus on fostering employment, education, and skill enhancement. This is seen as the way forward to ensure sustainable and inclusive economic growth. The emphasis is clearly on fostering quality growth. And this is, as it ought to be. As Prime Minister Narendra Modi put it: “In the last 10 years, 25 crore people have come out of poverty. This budget is for the empowerment of the new middle class. The youth will get unlimited opportunities from this budget. Education and skill will get a new scale from this budget. This budget will give power to the new middle class…
This budget will help women, small businessmen, MSMEs…” The Budget, quite correctly, has zeroed in on job creation as the sheet anchor of welfare policies of the new Government. The primary issue being discussed currently is the demand for jobs, specifically for stable or white-collar employment. Prime Minister Modi is credited with the view that the solution to this issue lies not in temporary fixes, but rather in a consistent effort to formalise the economy, thereby naturally leading to an increase in formal job opportunities.
The Finance Minister’s proposals have been well-received by corporate India, particularly for its support to the rural economy. The allocations have been spread across all segments. The total outlay has not changed much from the one in the Interim Budget, but the expenditures have been made to work better in terms of generating employment. This includes the direct payments to be made by the Government for first-time employees, based on provident fund data. Incentives have been given to employers too for increasing employment. All in all, it is a job well done!
