Centre to lower fiscal deficit despite capex boost in Budget 2024: Survey - Hindustan Times
close_game
close_game

Centre to lower fiscal deficit despite capex boost in Budget 2024: Survey

Jan 20, 2024 02:34 PM IST

Union Budget 2024 expected to strike balance between populism and fiscal prudence, finds the survey.

The Centre would aim for a lower deficit in the 2024-25 fiscal year despite increasing capital expenditure to a record level in the Union Budget 2024, as per a Reuters poll of economists. The February 1 budget is anticipated to strike a balance between populist measures and fiscal prudence while narrowing the fiscal deficit, according to the survey conducted from January 10-19 with 41 economists.

FILE: People watch the Union Budget being presented by Finance Minister Nirmala Sitharaman in the Parliament. (HT PHOTO)
FILE: People watch the Union Budget being presented by Finance Minister Nirmala Sitharaman in the Parliament. (HT PHOTO)

ALSO READ- Budget 2024: Industry body seeks tax holiday on standalone battery energy storage

HT launches Crick-it, a one stop destination to catch Cricket, anytime, anywhere. Explore now!

Reuters poll of economists on Union Budget 2024: 5 estimates

• In the backdrop of an election year, the budget, under Prime Minister Narendra Modi, who is pitching for his third term, is anticipated to navigate a delicate equilibrium between populist schemes and fiscal responsibility.

• According to the polls, the February 1 budget is projected to focus on narrowing the fiscal deficit to 5.30 per cent of GDP in 2024-25.

• Notably, the poll revealed that none of the economists identified education and healthcare as the primary budgetary concerns.

• Respondents highlighted infrastructure investment (34) as the foremost priority, followed by rural development (17) and job creation (16), given the challenge of accommodating millions entering the workforce annually.

• Additionally, the focus on deficit control is expected to limit the expansion of welfare schemes, and gross borrowing is predicted to remain largely unchanged at 15.60 trillion rupees from the current year's projection.

Why do economists think fiscal deficit will narrow?

The government is aiming to narrow the fiscal deficit to 4.50 per cent of GDP by the end of the 2025-26 fiscal year (FY) from 5.90 per cent in the current year to the end of March.

"To achieve the (2025-26) 4.5% deficit target, total expenditures would need to rise by no more than 7% per FY on average...meaning an even more aggressive cut to expenditures is likely in the coming years," said Alexandra Hermann, lead economist at Oxford Economics.

ALSO READ- Budget 2024: What is an interim budget? How is it different from regular one?

‘Education should be the main priority’

"Continued and rapid improvement in India's infrastructure will be paramount to reviving the private investment cycle," Hermann said.

"But to leverage India's huge potential and ensure sustainable and inclusive growth over the medium to longer term, human capital levels will need to improve, which is why spending on education should be the main priority."

ALSO READ- Union Budget 2024: Centre may revise tax exemption in Old Tax Regime, says report

'Informal sector continues to struggle'

"There are growth challenges that we remain wary of. Private non-infrastructure business capex is conspicuous by its relative absence," said Kunal Kundu, India economist at Societe Generale.

“Stress is more visible in the rural areas as the informal sector continues to struggle, especially MSME (micro, small and medium enterprises) which are the biggest job generators.”

(Inputs from Reuters)

Discover the complete story of India's general elections on our exclusive Elections Product! Access all the content absolutely free on the HT App. Download now!
Stay informed on Business News, TCS Q4 Results Live, Jio Financial Services Q4 Results Live along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
  • ABOUT THE AUTHOR
    author-default-90x90

    Follow the latest breaking news and developments from India and around the world with Hindustan Times' newsdesk. From politics and policies to the economy and the environment, from local issues to national events and global affairs, we've got you covered.

SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Monday, April 22, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On