Interim Budget 2024: Top 5 things expected in today's FM statement

Union Finance Minister Nirmala Sitharaman is all set to present the Interim Budget 2024-25, which is her sixth statement in a row, in a joint session of Parliament at 11 am. As it is an interim budget, the minister is not expected to announce major reforms or sops. However, experts feel that FM Sitharaman may address some of the pressing issues ahead of the elections and the full budget. These include toning down capital expenditure to control fiscal deficit, trimming subsidies, key welfare measures for four mentioned focus groups -- women, farmers, the impoverished, and youth.

1. Focus on key groups

Just before the Budget session in the parliament, FM Sitharaman in a meeting said Prime Minister Narendra Modi had recently mentioned these target groups -- youth, women, farmers, and the poor, and said the government aims to uplift these groups without considering caste, community, or religion.

"Yuva, women, those who give us food security, good farmers, and then the unfortunate poor, who still need some more support for them to get uplifted. Everything will be focused towards their betterment," Sitharaman said.
Therefore, it is expected that the government may bring in some measures for these groups, like it did for farmers, women, youth in the previous budgets.

2. More funds for skill development

It was earlier reported that the Centre may push the Skill India programme, with a potential 10 per cent increase from the current allocation of Rs 2,278 crore expected in the interim budget. The Centre had launched skill programmes in the past to push skilling of workers. Like in 2015, it launched the Pradhan Mantri Kaushal Vikas Yojana (PMKVY). The scheme offers free short-duration skill training and incentivizes this by providing monetary rewards to youth for skill certification.

3. Push to informal sector

Last month, FM Sitharaman mentioned that the government will guarantee the necessary policy support and credit accessibility for India's informal sector, which has always been the foundation of economic activity. This will aid them in expanding their operations while allowing the formal sector to pursue its own growth potential. Even the MSME sector has been the government to announce a special package in the upcoming Budget, with the aim of ensuring increased access to institutional credit at competitive rates.

Sudarshan Chari, Executive Director and Head of SME Banking, DBS Bank India, said, "In the upcoming budget, we anticipate a continued emphasis on supporting MSMEs in India, building upon the momentum initiated last year. Concerted efforts to include all MSMEs on Udyam will be crucial, enabling them to access government schemes, incentives, and formal credit channels. Additionally, the Open Network for Digital Commerce (ONDC) has proven instrumental in integrating SMEs from Tier 2 and 3 cities into the digital marketplace. The upcoming budget can strengthen this foundation by introducing new avenues for SMEs to expand and enhance e-commerce integration.”

4. Fiscal deficit

Earlier in the Winter Session of the Parliament, FM Sitharaman had said the NDA government will focus on fiscal prudence without compromising on judicious social welfare spending. The government intends to reduce its fiscal deficit to 4.5% of GDP by FY26 from the budgeted 5.9% for this fiscal year. She also said that the economy is "moving in the right direction" and "macro-economic fundamentals are fine".

Economists at ICRA expect the fiscal deficit target for FY25 to be set at 5.3% of GDP, midway through the expected print of 6.0% for FY2024 and the medium-term target of sub-4.5% by FY26. India has set a target of a 5.9% fiscal deficit for FY24.

5. Growth in Capex

FM Sitharaman will also be keenly watched for the Centre’s plans on public capex spending, which is considered as a driving force for economic growth and is expected to be a catalyst for driving a broad-based revival in private sector capex.

Analysts at Nomura noted that the focus on public capex has been a deliberate policy choice by the government to address India’s considerable infrastructure deficit and a substitute for lacklustre private capex in the hope that the latter will be eventually ‘crowded in’.

CII also suggested that the government increase its capital expenditure by 20 per cent to Rs 12 lakh crore, which will be less as compared to the last two years.

Also read: Budget 2024 live: More tax deductions under new regime? Answers at 11 am

Also read: Interim Budget 2024 Live: Measures for economy, farmers, women, unemployed youth likely? All eyes on FM Sitharaman