Budget 2024: Roti, deficit aur kisan. Seven things to look out for on February 1

Budget 2024: Finance minister Nirmala Sitharaman is most likely to unveil a new spending plan, taking targeting steps to bolster priority sectors -- Farmers, women, poor and youth. 

The Budget this week is an interim one with a full Budget expected somewhere around June-July. 
"It’s likely to be watched for the pace of fiscal consolidation and policy priorities ahead,” Madhavi Arora, an economist with Emkay Global Financial Services, told Bloomberg. 

There’s less pressure on the Modi government this time to go for populist steps. 
Here's what to look out for in her Budget speech on February 1. 

Deficit 
After surging to 9.2% of GDP during the pandemic, the Centre has been steadily bringing down the fiscal deficit to keep debt under control. The 5.9% deficit target for the current fiscal year ending in March will likely be met, and lowered further to 5.3% in the next financial year, according to economists surveyed by Bloomberg.

Getting fiscally fit
A chunk of positive with respect to budget deficit this year came from soaring tax receipts. 
Income tax is 30% higher than collected last fiscal=, corporate tax is up 20% and GST is 10% higher, according to HSBC Holdings. 

The Centre aims to bring down budget deficit to 4.5% over time, but it’s also funneling more of its spending to items such as infrastructure and curbing subsidies, which bodes well for the economy’s growth outlook, HSBC wrote in a note. 

Borrowing
Borrowing will likely remain near a record of around $180.5 billion in the coming fiscal year. The bond market, however, is less worried since overseas demand is set to surge this year when India gets a place in global bond indexes. 

Infrastructure 
The government ramped up capital expenditure by almost a third annually in the past three years, prioritizing spending on roads, ports and power plants. That’s helped to underpin economic growth of more than 7%, making India the fastest-growing major economy. 

Radhika Rao, economist at DBS Group Holdings Ltd., expects the pace of infrastructure spending to ease, though still remain fairly elevated at 9-10%.  

Farmers
Economists expect the government to give farmers more financial support after a number of aggressive steps it took last year to curb soaring food prices — like banning exports of rice, wheat and sugar — reduced farmers’ incomes. Poor rainfall also affected crops, hurting prospects in rural areas, where about 65% of India’s 1.4 billion people live. 

Subsidies
Modi government has already increased subsidies on cooking gas and fertilizers, and extended a free food program for 800 million people for five years, at a cost of $142 billion.

Jefferies India Ltd. analysts expect welfare spending to pick up, with some popular schemes such as farmer income transfer, housing for all and health insurance being expanded. Social spending excluding subsidies may increase by as much as 8% in the coming fiscal year that begins in April, compared with a 4% increase this year, the analysts wrote in a note.

Women
Media reports also suggest a social security fund for workers in the informal sector, including gig jobs in the February 1 Budgets. Cooking gas subsidies and cheaper loans may also be added to the list to woo women. Sitharaman may also look to double the annual payout to female farmers who own land to Rs 12,000, claim some reports. 

Free gas cylinders to women “could see a higher outlay amid the government’s vision to extend the program to 7.5 million new beneficiaries over the next three years,” QuantEco Research economists led by Shubhada Rao wrote in a note.