In about two hours, Finance Minister Nirmala Sitharaman will present her seventh consecutive Union Budget, surpassing the record of presenting six straight Budgets in the 1960s by Morarji Desai. Sitharaman’s Union Budget is expected to lay a roadmap for Viksit Bharat (developed India) by 2047, while giving a glimpse of 10 years’ performance.
Though the middle class will keep its eyes fixed on whether Sitharaman provides the much-speculated income tax relief, leaving more money in their hands as there is tax buoyancy, the market expects her to stay on the fiscal glide path to lower the fiscal deficit to 4.5 per cent of GDP by 2025-26.
Five years of bahi-khata
Sitharaman had in her first Budget in 2019 replaced the leather briefcase — which had been in use for decades for carrying Budget documents — with a traditional ‘bahi-khata’ wrapped in red cloth.
And three years ago, Sitharaman went digital with the bahi-khata. This year’s Budget is expected to stay paperless.
Now, the key numbers to watch out for
Fiscal deficit: It means the difference between the government expenditure and income. For the current fiscal, it is 5.1 per cent as projected in the Interim Budget in February, against 5.8 per cent in the last fiscal year. The Union Budget is expected to provide better-than-earlier projections as there has been tax buoyancy. The government has projected the fiscal deficit to be at 4.5 per cent of the GDP in FY26.
Capital expenditure: The government’s planned capital expenditure for this fiscal year is budgeted at Rs 11.1 lakh crore, higher than Rs 9.5 lakh crore in the last fiscal year. The government has been pushing infrastructure creation and also incentivising states to step up capex.
Tax revenue: The Interim Budget had pegged gross tax revenue at Rs 38.31 lakh crore for 2024-25, an 11.46 per cent growth over the last fiscal. This includes Rs 21.99 lakh crore estimated to come from direct taxes (personal income tax + corporate tax), and Rs 16.22 lakh crore from indirect taxes (customs + excise duty + GST).
GST: Goods and Services Tax (GST) collection in 2024-25 is estimated to rise to Rs 10.68 lakh crore, an increase of 11.6 per cent. The tax revenue figures will have to be watched out for in the final Budget for the 2024-25 fiscal year.
Borrowing: The government’s gross borrowing Budget was Rs 14.13 lakh crore in the current financial year as per the Interim Budget. The government borrows from the market to fund its fiscal deficit. The borrowing number will be watched by the market, especially on the back of a more-than-expected dividend from the RBI and financial institutions.
Nominal GDP: This means real GDP plus inflation. India’s nominal GDP growth in the current fiscal year is estimated to be 10.5 per cent to Rs 327.7 trillion as per the Interim Budget. In view of expected normal monsoon, improvement in revenue collections and pick up in rural consumption, it is expected that there could be upward revision in growth estimate.
Real GDP: The RBI has projected it to grow at 7.2 per cent in current fiscal.
Dividend: The interim Budget had projected Rs 1.02 lakh crore from RBI and financial institutions. This will be revised upwards as the RBI has already made a surplus transfer of Rs 2.11 lakh crore earlier in May. At the same time, Rs 43,000 crore is expected to be garnered from CPSEs (central public sector enterprises).
Besides, also keep an eye on announcements about the spending plans for key schemes like MNREGA and key sectors like health and education.
(With inputs from agencies)
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