Decoding Nirmala Sitharaman’s Pre-Budget Statements: What to Expect in Budget 2024
With the anticipation surrounding the upcoming budget presentation by Finance Minister Nirmala Sitharaman on February 1, there’s a plethora of expectations and speculation regarding budget. However, Sitharaman’s recent statements provide valuable insights at what direction the budget might go, signaling o clues about the government’s priorities and focus areas.
Interim budgets
notable statement made by Sitharaman at the Global Economic Policy forum organized by the Confederation of Indian Industry (CII) has tempered expectations from the forthcoming budget. She emphasized that the budget would essentially be a vote on account, serving the purpose of meeting the government’s expenditure until a new government assumes office. Despite this, it’s crucial to note that such interim budgets commonly include targeted welfare measures, especially for economically vulnerable sections like small farmers.
Informal sector and MSMEs:
Moreover, Sitharaman’s emphasis on managing finances according to priorities underscores the government’s commitment to addressing the needs of the poor and vulnerable. In particular, she highlighted the importance of supporting the informal sector, which plays a vital role in driving economic activity. This focus on bolstering credit availability and policy support for the informal sector is expected to be reflected in the budget, with special packages aimed at enhancing access to institutional credit for Micro, Small & Medium Enterprises (MSMEs).
The MSME sector, in particular, anticipates measures to address the existing imbalance in power dynamics between banks and MSMEs, alongside ensuring competitive access to credit. Such initiatives could significantly empower MSMEs and contribute to economic growth and job creation.
Sitharaman’s recent remarks also offer insights into the government’s priorities, particularly its focus on key demographic groups. By emphasizing the importance of supporting youth, women, farmers, and the economically disadvantaged, Sitharaman hinted at the government’s intention to prioritize welfare measures targeted at these segments. This aligns with Prime Minister Narendra Modi’s recent statements and suggests that the budget may allocate resources towards initiatives aimed at uplifting these groups.
Reducing the fiscal deficit: (expenditure will not cross the total revenue)
However, amidst these priorities, Sitharaman remains committed to fiscal prudence and maintaining macroeconomic stability. She reiterated the government’s goal of reducing the fiscal deficit to 4.5% of GDP by FY26, underscoring the importance of balancing social welfare spending with fiscal discipline. Economists predict a nuanced approach in the budget, with increased social spending complemented by a focus on capital expenditure, albeit at a more moderate pace compared to previous years.
Conclusion:
In broad terms, the interim budget is expected to prioritize higher social spending while maintaining fiscal discipline. This may entail hiking allocations for existing schemes, boosting capital expenditure, and setting a lower fiscal deficit target for the next financial year. However, given the ruling BJP’s confidence in the upcoming elections, major policy announcements or new schemes may be deferred to the full budget of the next government.
As the country eagerly awaits the budget announcement, Sitharaman’s statements provide valuable insights into the government’s policy direction and priorities. While the budget may not herald groundbreaking reforms, it is expected to strike a delicate balance between addressing immediate socio-economic challenges and ensuring long-term fiscal sustainability.
