FM to present final budget before LS polls today

February 01, 2024 08:48

Finance Minister Nirmala Sitharaman will on Thursday present the Modi 2.0 government's last budget before the general elections, which is likely to contain a mix of measures for the economy and electorally significant segments like farmers and women.

Peppered with political innuendos, her sixth straight budget may present a political document with a snapshot of the Modi government's triumphs over the last 10 years and pointers to how it wants to take the country forward.

With pressure for populist measures off after recent emphatic wins in three states, she is expected to stick to being fiscally prudent while sprinkling sops on sectors like agriculture and engines of the economy that would create jobs and boost consumption.

The budget she will present is technically a vote on account and popularly termed an interim budget as it seeks Parliament's nod for a grant in advance to meet the central government's essential expenditure for the first four months of the new fiscal year that starts in April. A new government elected after the April/May general elections will present the full budget, likely in July.

The interim budget, however, presents an occasion for spectacle just weeks ahead of the Model Code of Conduct coming into force.

While the precedence dictates that no major policy announcements are made in a vote on accounts, going by past conventions hasn't stopped governments from making big announcements like the cash dole for farmers announced in the 2019 interim budget.

The budget is expected to focus on infrastructure and buck a trend of spending big on new vote-garnering measures.

The budget would, however, provide an occasion to assess the fiscal health of the economy against the backdrop of robust economic growth. It would provide an occasion for the government to give a clear roadmap for achieving the Fiscal Responsibility and budget Management Act (FRBMA) targets.

The budgeted fiscal deficit of 5.9 per cent of the gross domestic product (GDP) for the current fiscal is likely to be achieved, but it is nearly twice the FRBM fiscal deficit to the GDP target of 3 per cent for the central government. Correspondingly, the debt-GDP ratio at 54 per cent is also well above the target of 40 per cent.

EY, in a note, said the possibility of sustaining nominal GDP growth at 10.5 per cent, it may take up to 13 years to reach a debt-GDP level of 40 per cent. This is based on successfully reducing the fiscal deficit to GDP ratio to 3 per cent by FY29. -- PTI

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