New Delhi, The recently unveiled interim Budget for the fiscal year 2024-25, presented by Finance Minister Nirmala Sitharaman, has sparked surprise and skepticism from former FICCI Chief Naina Lal Kidwai. The government, in its budgetary commitments, declared a decisive reduction in the budget gap, targeting 5.1% of the Gross Domestic Product (GDP), a more stringent figure than the anticipated 5.3%.
Kidwai, a seasoned financial expert, expressed her astonishment, stating, “The budget was a bit of a surprise because many of us were expecting a commitment to stay with the fiscal deficit at 5.3%. The government has announced a fiscal deficit of 5.1%, which is even stricter than what they had originally indicated and which the markets had readily accepted.”
Raising critical questions about the foundation of the government’s optimistic revenue projections sustaining the 5.1% deficit target, Kidwai emphasized the lack of a corresponding reduction in capital expenditure. She remarked, “We don’t know on what basis they believe that the revenues will be good and healthy enough to enable the fiscal deficit at 5.1%.”
Despite her reservations, Kidwai acknowledged two positive aspects emerging from the budget – the notable increase in capital expenditure to a historic high of 11.11 trillion rupees ($133.90 billion) and the government’s commitment to maintaining fiscal discipline.
In his post-budget statement, Prime Minister Narendra Modi lauded the strategic balance achieved in the budget, stating, “In this budget, capital expenditure has been raised to a historic high of 11.11 trillion rupees, while keeping the fiscal deficit in control. To put it in the terms of economists, this is a sweet spot.”
Economists are optimistic that the government’s focus on fiscal consolidation will strengthen India’s case for an improved sovereign credit rating in the coming months. Presently, S&P and Fitch rate India at BBB-, while Moody’s rates the country at Baa3, the lowest investment grade.
For a detailed analysis and comprehensive coverage of Budget 2024 and related developments, readers are encouraged to explore Magadh Today.
