Budget 2024: Rajeev Yadav, deputy CEO of AU Small Finance Bank, lays down five key priorities for finance minister

Rajeev Yadav, deputy CEO of AU Small Finance Bank sees the Union Budget 2024-25 setting the economic tone for a 'Viksit Bharat' while maintaining focus on fiscal management to achieve fiscal deficit. Yadav lists his expectations ahead of Union Finance Minister Nirmala Sitharaman presenting her seventh successive Budget on July 23. 

The government is now set to present a revised Union Budget for FY25, which will supersede the Interim Budget presented earlier in February 24. The newly-appointed government will be expected to continue with policy focus on prudent fiscal management and fiscal glide path to achieve fiscal deficit of 4.5 percent by FY26. This augurs well for overall macro-stability for transitioning towards the goal of Viksit Bharat by 2047.  

The Union Budget should focus on five key priorities: 

• Fiscal Discipline: Commitment towards fiscal discipline needs to get reiterated and will boost India’s fiscal image at a time of global bond inclusion. A sovereign rating upgrade over next two years will lower the cost of borrowing for all economic stakeholders in the country. 
• Deposit Mobilisation: Viksit Bharat requires scaling up of financial intermediation in a sustainable manner. There is an urgent need to accelerate deposit mobilisation by the banking system. The Union Budget (along with support from the RBI) could look at providing a level playing field to bank deposits vis-à-vis other competing instruments by incentivise deposit mobilisation through lowering tax incidence on FDs. 
• Rebate for scaling up banks' tech infra: Indian banks have been spending 6-8 percent of total operating expending on technology. This is lower than the global average of 10-12 percent. With government’s focus on digitisation and financialisation of the economy and boosting cyber security, Indian banking system needs to meaningfully scale up the technological infrastructure to be future ready. (deeper penetration of digital payments, adoption of CBDC, rapid use of AI in customer service etc). The Union Budget could offer some tax rebates for scaling up technological infrastructure. 
• Creation of jobs: Job creation needs to be is a top priority for the policymakers to help maximise India’s demographic dividend and sustain GDP growth close to 8 percent. (as per the UN, India’s working age population is expected to peak around 2040). The Union Budget needs to be multi-dimensional prioritising filling of government jobs, existing PLI scheme to reinvigorate labour intensive sectors (esp. involving the SMEs) like textiles, leather, tourism etc, doubling increasing allocation towards education from close to 3 percent currently of GDP to around 6 percent. 
• Boost private consumption: Supporting demand side economic activity through private consumption will not just raise demand at the bottom of pyramid, but it would also help the fiscal revenue by boosting indirect tax collections. The Budget could consider increasing targeted allocation for affordable housing under the PMAY Scheme while also providing tax incentives to home loan borrowers for developers. Scaling up of agriculture infrastructure and encouraging ‘farm tourism’ will also provide a strong impetus to rural incomes. 

The Union Budget needs to set the tone for economic momentum for the next five years. This will involve a fine balancing between preserving of fiscal discipline, boosting inclusive consumption, and incentivising financial savings, private investment, and exports.