Union Budget To Focus On Agriculture, Welfare, And, Of Course, Jobs

The Union Budget 2024, as per the report released by CareEdge Ratings, is expected to focus on agriculture, welfare schemes, and job creation. The budget is likely to support consumption through higher allocations for the rural economy, welfare schemes, and agriculture. This includes increased funding for programs like PMAY (Pradhan Mantri Awas Yojana) and MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), which are aimed at boosting rural consumption and infrastructure.

The focus on agriculture is expected to be significant, with measures likely to enhance agricultural productivity and rural incomes, potentially through higher Minimum Support Prices (MSPs) and support for schemes like PM Kisan Samman Nidhi. These steps are aimed at stimulating the rural economy and addressing the welfare of the agricultural sector and rural communities.

The budget is also expected to continue its focus on manufacturing and capital expenditure (capex), with potential increases in Production-Linked Incentive (PLI) allocations for sectors like textiles, leather, footwear, and toys to boost job creation. The allocation under major PLI schemes has grown significantly in FY25, indicating a boost to manufacturing and related sectors.

The government is likely to retain the capex target for FY25 at Rs 11.1 lakh crore, which is a growth from previous years, showing commitment to capital expenditure despite fiscal challenges. The overall public capex grew by 15.1% in FY24. For FY25, there is an expectation of a 5.2% growth in allocation to Central Public Sector Enterprises (CPSEs) for capex, indicating a continued push for infrastructure development.

On the revenue front, CareEdge Ratings expects the government to manage revenue and expenditure in FY25 by focusing on higher tax revenue growth, particularly from strong direct tax collections, which are projected to grow by 11%, higher than the budgeted growth of 10.6%. They anticipate an overall revenue collection upside of Rs 1.4 lakh crore, including Rs 1.25 lakh crore from non-tax revenue (largely due to higher-than-expected transfers from the Reserve Bank of India) and Rs 15,000 crore from tax revenue.

This additional revenue is expected to help reduce the fiscal deficit target to 5% of GDP, even with increased revenue expenditure of Rs 75,000 crore, demonstrating a balance between spending for growth and fiscal prudence. CareEdge Ratings expect tax buoyancy at 1.04 marginally higher than budgeted buoyancy of 0.96 in FY25.

The report also mentions that the general government debt has shot up to 83 per cent of GDP in FY24, resulting in a high-interest burden. With sovereign rating agencies watching the debt trajectory, the focus on fiscal consolidation should continue. CareEdge Ratings also believes government borrowing is expected to fall, with net borrowing in the range of Rs 11.2-11.4 lakh crore (Rs 11.8 lakh crore as per Interim Budget).

The Union Budget 2024 is expected to focus on boosting the rural economy, enhancing welfare schemes, promoting job creation, and maintaining fiscal discipline. The government’s approach to balancing growth and fiscal prudence, as well as its commitment to infrastructure development and manufacturing, will be key to achieving these goals. The budget is expected to be presented on July 23, and it will be interesting to see how these expectations are addressed.