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Published: June 17, 2024
Updated: June 17, 2024

Budget 2024: Key Expectations and Pre-Budget Meetings

Pre-Budget Consultations Set for June 20

Finance Minister Nirmala Sitharaman is scheduled to hold pre-budget consultations with industry stakeholders on June 20, 2024. This comes ahead of the presentation of the 2024-25 fiscal budget, expected in Parliament in the latter half of July. An initial meeting with the Revenue Secretary is slated for June 18, as part of the preparatory process.

Economic Agenda for Modi 3.0

The upcoming budget will outline the Modi 3.0 government's economic agenda, focusing on measures to boost growth while managing inflation. Key priorities include fast-tracking reforms to propel India towards a $5-trillion economy and achieving 'Viksit Bharat' by 2047. The government must also address coalition demands and resource allocation to meet fiscal goals.

Economic Growth Projections

The Reserve Bank of India (RBI) projects the Indian economy to grow by 7.2% in FY25, driven by rising rural demand and moderating inflation. The Modi 3.0 government benefits from a robust economic foundation and fiscal prudence, highlighted by the RBI's record dividend of ₹2.11 lakh crore for FY24.

Policy Priorities for the New Term

Prime Minister Narendra Modi's third term will prioritize addressing food inflation, unemployment, agricultural stress, job creation, and sustaining capital expenditure momentum. Revenue growth and fiscal consolidation remain crucial for maintaining economic stability. S&P has noted a positive outlook on the Modi administration's economic policies, hinting at a potential rating upgrade if the fiscal deficit roadmap is adhered to.

Challenges and Expectations

While tax revenues have been strong, non-tax revenue poses challenges, particularly with the slow progress in strategic disinvestment, aside from the sale of Air India. Analysts predict potential changes in the income tax regime for salaried employees and increased government spending on rural job creation, housing, water, and agriculture through programs like MGNREGA.

Focus on Private Investment and MSMEs

To stimulate private investment, the government is expected to expand the Production Linked Incentive (PLI) schemes to include additional labour-intensive sectors. Significant investments in government capital expenditure, MSMEs, and startups are anticipated to address youth unemployment and spur economic growth.

Agricultural Sector Support

Increasing the Minimum Support Price (MSP) and removing export bans on agricultural products such as onions, wheat, and sugar will be beneficial. Despite potential short-term agricultural productivity declines due to heat waves, improved monsoon forecasts for FY25 are expected to bolster the sector.

The 2024-25 Budget is poised to set the stage for India's economic trajectory under the Modi 3.0 government. By addressing key economic challenges and leveraging strong fiscal foundations, the government aims to foster sustainable growth and move towards its long-term economic goals.