Kolkata: With the Modi 3.0 government in place, all eyes are now eagerly set on the upcoming Union Budget 2024, which is expected to be tabled in July. Anticipation runs high among industries, farmers, taxpayers and the middle class alike, as they await potential boosts and tax reliefs from Union Finance Minister Nirmala Sitharaman.
Sitharaman has a tough task at hand. She will either have to stick to fiscal prudence or loosen her purse string. But, whatever she chooses, her priorities will remain the same, which is to boost growth without hurting inflation create jobs and improve income levels. India’s retail inflation, measured by the Consumer Price Index (CPI) eased to 4.75% in May from 4.83% in April 2024, according to the latest Ministry of Statistics and Programme Implementation data. The CPI last hit the lowest at 4.25% in May 2023.
Reserve Bank of India will not cut rates until inflation comes down below four per cent. Therefore, the borrowing cost will remain expensive and Sitharaman will have to work towards to bringing down inflation below four per cent. It is essential to sustain the capex momentum even though private investments are showing an upward trajectory.
There's an undeniable stress in the agriculture sector to deal with while consumption, particularly in rural areas needs an urgent revival. The FM will have to allocate more funds or come up with schemes to boost rural consumption. The budget will be tabled when the monsoon is expected to be there in full vigour. In June, the rains have been below normal as indicated by the Indian Met Department. If that trend continues, too, in July, then rural stress will increase and the FM will have to rethink how to address the issue in her Budget.
The BJP's election manifesto had talked about expanding the free health insurance programme to senior citizens, piped cooking gas connections, free food rations for the next five years, and free electricity to poor households, among others. It also mentioned a broader government push towards supply-side reforms, including higher infrastructure spending (both digital and physical), a manufacturing push and the creation of employment opportunities. But more programmes need to be rolled out covering education and health.
