Budget 2024 hopes: Stay steadfast on capex-led growth
MUMBAI : Domestically, the backdrop is that of an impending general election, and, traditionally, an incumbent government cannot present a full Union budget in such a year. Whereas, globally, the setting is that of a debate on debt and sustainability amid falling growth. But that shouldn’t necessarily be the context for the upcoming budget.
A myopic focus a la the developed economies or the rest of the world on just debt reduction could prove to be costly in the long term as the India story literally has miles to go. Likewise, an interim budget presented by the government before the general elections should not constrain its ambition to do what is right for an economy that is poised at a critical juncture. The government must focus on nurturing and furthering India’s human and physical capital, and invest in areas that can enhance its potential growth and usher it towards the goals of India’s Amrit Kaal.
The budget must provide a blueprint for steering the economy towards a sustained high-growth trajectory in a growth-starved world. This will ensure that our debt-to-gross domestic product (GDP) ratio will decline once the economy is on a higher growth path. Note, the global economy is forecast to slow even more in 2024 to approximately 2.6%.
Moreover, the expectation is that conditions will weaken over the year ahead due to high interest rates, geopolitical tensions and a slowdown in the world’s top economies. So, what should the interim budget focus on? Adherence to fiscal targets and fiscal consolidation road map: The targeted fiscal deficit for 2023-24 is 5.9%, which is a 50-basis-point reduction from 2022-23 levels. Adhering to these targets will reassure sovereign rating agencies and investors.
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