Experts and economists have praised the fiscal projections in the interim budget, saying the low fiscal deficit projection shows that even in an election year, the government is serious about fiscal consolidation and the numbers seem achievable.
KV Subramanian – IMF’s Executive Director and former Chief Economic Adviser to the Government of India said, “…as I said, this is an anti-people budget. The actual fiscal deficit was announced at 5.8% as compared to the budget estimate of 5.9%. When the revised numbers come in, I think the fiscal deficit will come down further.” , because the projected returns will be much higher. 5.1% is pretty good…If there is no change in the budget come July, I’d say 5.1% is achievable…”
According to Devendra Kumar Pant, Chief Economist at India Ratings, the two broad themes of the interim budget are fiscal consolidation and a focus on agriculture/rural sectors, and to some extent, the differential benefits of ongoing economic growth. Favorable for higher income bracket/urban families.
Fiscal deficit numbers for FY24 and FY25 indicate that the government is serious about achieving the fiscal consolidation path of 4.5 percent fiscal deficit by 2026, Pant said, given the nominal GDP growth assumption and revenue growth, the target is credible. Note.
He added that net market borrowing of Rs 11.75 lakh crore in FY25 bodes well for the bond market and is likely to have a positive impact on 10-year G-second yields.
Former CEO NITI Aayog Amitabh Kant said, “There is a lot in the budget for women, youth and farmers. Budget is inclusive. The philosophy of the budget is that when these people are raised at the top, the whole country grows and progresses. I have worked with this government for a long time and I believe that the government believes in saturation that every government scheme should be saturated with everyone. It doesn’t look at caste, it doesn’t look at religion…but the budget is progressive. It looks to 2047 and says that the country should grow rapidly to become a developed country by 2047, as the visionary has written about its development.
Aditi Nair, chief economist at Icra Ratings, said higher-than-expected capex (Rs 10 lakh crore vs Rs 9.3 lakh crore in FY24, Rs 11.1 lakh crore vs Rs 10.2 lakh crore, Rs 10.2 lakh crore in FY24 vs. 6 per cent in 2024 and 6 per cent in FY25). 25 to 5.1 percent vs. 5.3 percent seen earlier) suggesting that the quality of spending will be healthier than earlier.
Faster fiscal consolidation and a fall in borrowing should further cool GSec yields in the coming year, as long as earnings and capital receipts figures look credible as the year progresses, they added.
The revised FY24 budget estimate implies a higher central tax allocation as compared to the budget estimate. This implies issuance of Rs 3.6 lakh crore in Q4, up 5 per cent year-on-year, giving a further downside to state bond issuance in the current quarter, which was indicated at Rs 4.1 lakh crore, they said. .
National Stock Exchange of India (NSE) CEO Ashish Chauhan said, “When I read the budget speech, three words came to my mind – growth, welfare and fiscal control. Achieving all three objectives is a difficult task for a government, and they have proved over the last 10 years that they have been able to build brick by brick a social security framework available to every citizen of India. Over the last 10 years, logistics costs have dropped to single digits – in terms of roads, ports and airports. It is a very welcome step. Atmanirbhar technology developed in Vande Bharat, many metros are going to further reduce the cost of logistics…”
“Digital infrastructure needs to be scaled up. Despite all the efforts towards Digital India, the digital divide still exists. I expect at least 15 percent increase in spending on digital,” says Assocham National Council on Education Chairman Kunwar Shekhar Vijendra.
KPMG India chief executive Yezdi Nagporewala has ensured that the interim budget will not yield to short-term political compulsions and keep the fiscal deficit under control. It also shows the seriousness of the government to step on the path of green growth, its commitment to equitable and inclusive growth with a focus on the poor, women, youth, farmers, infrastructure development and economic prudence. These are likely to create new opportunities, boost demand and unlock multipliers for the economy. The biggest highlight is the fiscal discipline and the fiscal deficit estimate of 5.1 percent, he added.
According to Radhika Rao, senior economist at DBS Bank, the interim budget has prioritized pragmatism over populism, focusing on higher capex and faster fiscal consolidation. The estimate not only projects a better budget deficit target than in FY2024, but narrows the FY25 goalpost at 5.1 percent against expectations of 5.3-5.4 percent. By extension, gross and net borrowings are much lower than in FY24, providing significant relief to the debt market, which will help curb borrowing costs and congestion in the private sector.
While focusing on welfare of women, youth, poor and farmers, the government has refrained from complete populism while continuing to focus on capex to improve the quality of spending, Rao said.
Union Finance Minister Nirmala Sitharaman presented the Interim Budget in Parliament today. However, they indicated that the full budget will be brought in July.” “In the full budget in July, our government will present a detailed roadmap for pursuing Vikhit Bharat,” she said.
In a major announcement during the presentation of the Interim Budget 2024-25, Nirmala Sitharaman unveiled the government’s ambitious plan to create a Rs 1 lakh crore corpus to encourage private investment in sunrise technologies.
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