The expectations of every sector of the economy from the upcoming full Budget FY25 are increasing. The resilience of the economy when seen with the robust contribution of a dividend of ₹2.1 trillion by RBI adds to the fiscal strength.

As against the fiscal deficit of 5.1 per cent envisaged on February 1, 2024, in the Interim Budget, the deficit may go down to 4.5 per cent by the end of next fiscal — 2025-26. During April-May 2024, government expenditure was low due to the model code of conduct and the capex was at a six-month low. No new projects were funded.

The fiscal deficit during April-May stayed at 3 per cent of GDP.

The GDP is expected to surpass the RBI estimate of 7.2 per cent. According to the IMF, the nominal GDP of India is expected to reach $4.339 trillion by 2025 while Japan’s GDP is predicted to reach $4.310 trillion when India will be the 4th largest economy on its way to become the third-largest by 2027. India alone is contributing 15 per cent of the global growth now.

Middle-class woes

Even when the economy is doing well the pain points of middle- and low-income groups have increased. They seek income tax relief by further rationalising taxable slabs. It should create more space for health insurance protection. As interest rates are set to go down, some exemptions from TDS on interest on fixed deposits could be expected. Despite diminishing inflation, the lifestyle costs of middle-income and retirees are going up. The higher longevity with shrinking savings is putting pressure on elders amid the waning joint family culture.

Budget time is funding time for various social welfare programmes. The prominent among them are — MGNREGA, Digital India, Skill India, Swatch Bharat Mission, Bharat Mala, PM Gram Sadak Yojana, and PM Awas Yojana where 4 crore houses were built and allotted and 3 crore new houses are proposed to be built.

It will be a tough challenge to support the social sector schemes by fixing the proportionality of budgetary flows among them. The broader focus continues to be on key sectors such as semiconductors, solar, electric vehicles, green hydrogen, batteries, and the aviation sector to increase manufacturing and unleash growth. Balancing the budgetary allocations between different sectors of the economy while maintaining focus on infrastructure development with a long-term vision calls for foresight and a knack for prioritisation.

Maintaining a balance between fiscal prudence amid the various forces drawing government resources calls for collaborative efforts.

The writer is an Adjunct Professor, at the Institute of Insurance and Risk Management, Hyderabad. Views are personal

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