How FM struck a fiscal chord: Story of Budget in nine charts
Mint explains the numbers. Just two months ahead of the national elections, the Narendra Modi government defied the temptation to use the Budget to announce any new measure that could be deemed populist. Instead, it showed the intent for better fiscal discipline than was expected, with an eye on a medium-term consolidation path.
That’s come at the cost of just a tepid increase in capital spending and a compression in revenue spending. The government’s aim for a fiscal deficit of 5.1% of GDP in 2024-25 is around 70 basis points lower than the updated estimate for the current year. This puts the goal to reach the 4.5% mark by 2025-26 within striking reach.
The reduction relies on a check on expenditure: the total budget size is down from 15.1% of GDP to 14.5%, while receipts are likely to get a meagre bump from 9.3% of GDP to 9.4%. The capital spending component, which had seen a massive boost in the previous years, is set to increase only by 20 basis points (but the new share, 3.4%, will be the highest in two decades). In 2023-24, too, the capital spending budget was 3.4% of GDP, but revised estimates show that this will be curtailed marginally to 3.2%.
While the capex budget is still rising, the capex by public sector enterprises (which they raise themselves outside the Centre’s books, but is still an indicator of their role in national growth) will continue to slip to just 1% of GDP from the pre-pandemic levels of 3.2-3.5%. Revenue expenditure will rise only 3.2% year-on-year, with no increase in outlay for the rural jobs scheme and underwhelming hikes for the agriculture and rural sectors. But don’t go by the allocation: in recent years, the Centre has adopted the policy of boosting welfare funds later in the year if
. Read more on livemint.com
