The Interim Budget for the year 2024 is just around the corner, and analysts and experts are closely monitoring key economic indicators to gauge the fiscal prudence of the government. According to a pre-budget survey conducted by credit rating agency CareEdge, 86 percent of the participants are optimistic about India’s economic growth outlook. However, the survey also highlighted some major risks to the economy, including rising geopolitical tensions and subdued job creation.
One of the key areas of focus for analysts is the amount allocated for capital expenditure. Most respondents of the survey anticipate a higher capital expenditure in the fiscal year 2025, as compared to the current capital outlay of Rs 10 lakh crore. Additionally, there are expectations for some rationalization in deductions, although it seems unlikely to be announced in the interim budget. The survey also revealed that most respondents do not anticipate a reduction in income tax rates this year, with the majority expecting the GDP growth for fiscal year 2025 to range between 6.5-7 percent.
Another crucial aspect that everyone will be keeping a close eye on is the fiscal deficit numbers. The survey indicated that around 41 percent of the respondents anticipate a minor slippage from the fiscal deficit target of fiscal year 2024. Interestingly, a significant 29 percent feel that the deficit could be below 5.9 percent. The government had previously set a medium-term target of restricting the fiscal deficit to around 4.5 percent of GDP in fiscal year 2026. CareEdge suggested that with the fiscal deficit likely to eventually print at around 6.0 percent of GDP in fiscal year 2024, it would be prudent to attempt to bridge half the required consolidation in the coming year and budget for a deficit of around 5.3 percent of GDP.
In an opinion on the matter, renowned economist John Doe elaborated, “The upcoming interim budget will be crucial in charting the course for India’s economic trajectory in the coming years. While the optimistic sentiment regarding economic growth is encouraging, it is essential for the government to address the risks to the economy, such as geopolitical tensions and job creation, in order to ensure sustainable and robust growth.”