Finance Minister Nirmala Sitharaman is set to conduct pre-budget consultations with industry chambers on June 20, according to sources. This discussion is a critical step in formulating the budget for the 2024-25 fiscal year, which is expected to be presented in Parliament in the latter half of July.
Pre-Budget Preparations
Prior to the consultation with Sitharaman, industry representatives will engage in a meeting with Revenue Secretary Sanjay Malhotra on June 18. These preliminary discussions are vital in gathering insights and feedback from various sectors to shape the government’s economic policies.
Economic Agenda for Modi 3.0 Government
The upcoming budget is anticipated to outline the economic agenda for Prime Minister Narendra Modi’s third term in office. A primary focus will be on accelerating reforms aimed at transforming India into a USD 5-trillion economy and achieving the vision of ‘Viksit Bharat‘ by 2047. The budget will need to balance growth stimulation with inflation control and resource allocation to meet coalition government commitments.
Current Economic Landscape
The Indian economy is projected to grow by 7.2% in the current fiscal year, supported by improving rural demand and moderating inflation, according to Reserve Bank of India (RBI) estimates. The Modi 3.0 administration begins its term with a robust economic foundation and fiscal prudence, bolstered by an unprecedented dividend of Rs 2.11 lakh crore announced by the RBI for FY24.
Key Policy Priorities
The government’s third term policy priorities include addressing agricultural sector stress, creating jobs, maintaining capital expenditure momentum, and enhancing revenue growth to adhere to the fiscal consolidation path. These priorities aim to sustain economic stability and promote inclusive growth.
Positive Economic Outlook
Global rating agency S&P has acknowledged the positive impact of the Modi government’s economic policies over the past decade by upgrading India’s sovereign rating outlook to positive. The agency has also indicated a potential rating upgrade in the next 1-2 years, contingent on adherence to the fiscal deficit roadmap.
Challenges in Revenue Generation
While tax revenues are performing well, non-tax revenue generation remains challenging. Strategic disinvestment efforts have seen limited success, with no significant sales beyond the Air India transaction. This presents an area of concern that the upcoming budget might address through innovative measures and strategic planning.
The pre-budget consultations led by Finance Minister Nirmala Sitharaman on June 20 will be crucial in setting the economic direction for the upcoming fiscal year. The insights and feedback from industry leaders will help shape policies aimed at sustaining growth, managing inflation, and fulfilling the government’s long-term economic vision.
