Get ready for a different kind of budget on February 1! The Finance Minister, Nirmala Sitharaman, has explained that it’s an interim budget because of the upcoming elections. This means the budget won’t have major new policies; instead, it will mainly cover government spending until a new government takes over after the elections.
Even though it’s not the final budget, people are getting excited about what it might include. Gurmeet Singh Chawla, Director of Master Capital Services Ltd., talks about what the government might do in the budget before the upcoming Lok Sabha elections in April to May 2024 in India.
Welfare Spending and Fiscal Deficit:
- The government is planning to increase spending on welfare, focusing on areas like healthcare and education.
- They aim to reduce the fiscal deficit, which is the gap between government spending and revenue, to 4.5% of the GDP by 2025-26.
Tax Reduction and Support for Agriculture:
- There might be announcements about lowering taxes to support specific industries or income groups.
- The government could provide tax breaks or incentives to help farmers and rural development.
Infrastructure Boost:
- More money is expected to be allocated to improve infrastructure, especially in areas like digital technology, green energy, electric vehicles, and broadband.
Subsidies for Food and Fertilizer:
- The government is considering allocating around Rs. 4 trillion ($48 billion) for subsidies related to food and fertilizers.
- This move aims to support farmers and ensure the availability of affordable food.
Increased Funding for Affordable Housing:
- The government may increase funding for affordable housing by more than 15%, reaching Rs 1 trillion ($12 billion) for the financial year 2024-2025.
Divestment Goals:
- The government has set a target to raise Rs 510 billion (equal to $6 billion) through divestment, indicating its plan to sell certain assets or investments.
While the interim budget might lack the fireworks of a full-fledged fiscal policy announcement, it still holds significance. It offers a glimpse into the government’s priorities and its plans for navigating the economic landscape leading up to the elections. By understanding these anticipated developments, we can gain valuable insights into India’s near future and make informed decisions in a dynamic financial environment.