With the interim budget for 2024 just a week away, economic experts predict that the government is unlikely to introduce major populist schemes, following the trend of interim budgets avoiding entirely new initiatives. According to CNBC-TV18, the focus will be on fiscal deficit consolidation and maintaining a balance between populist measures and capital expenditure.
Samiran Chakraborty, Chief India Economist at Citi, highlights the government’s challenge in introducing expansive populist schemes while aiming to substantially reduce the fiscal deficit. While small adjustments like increasing the PM Kisan scheme amount may occur, a substantial populist initiative is not anticipated.
Kaushik Das, chief economist of Deutsche Bank, expects the government to adhere to a broader fiscal deficit consolidation plan, targeting around 5.3 per cent. As of November 2023, the fiscal deficit has already surpassed 50 per cent of the full-year budget estimate, reaching Rs 9.06 lakh crore.
Soumya Kanti Ghosh, Group CEA at State Bank of India, envisions the possibility of a roadmap outlining the government’s broader plans for the next few years, with a focus on key programs like Prime Minister Awas Yojana.
Ghosh anticipates positive surprises in capital expenditure, estimating a growth rate of 13 per cent to 14 per cent, bringing it close to 3.5 per cent of GDP in the next fiscal year. Reports suggest a proposal for a minimum 15–20 per cent increase in capital expenditure, with a significant portion directed towards infrastructure and strategic ministries.
Chakraborty notes that the central government’s tax-to-GDP ratio is nearing an all-time high, reflecting improved compliance. The real surprise, according to him, lies in non-tax revenue, with expectations of a significantly higher Reserve Bank of India (RBI) dividend and continued profits from public sector undertakings (PSUs) in FY24, potentially boosting non-tax revenue for FY25.
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