Setting up Foundations for A Developed Economy

Setting up Foundations for A Developed Economy

Context: Recently, India’s economic strategy of fiscal prudence and capital expenditure-led growth has received global acclaim.

Key analysis
• Deficit Target Achieved: India surpasses its fiscal target with a 5.8% deficit for 2023-24, showcasing fiscal prudence amid global uncertainties.
• Strategic Target: The 2025-26 fiscal deficit goal of 5.1% reinforces economic resilience, crucial in a geopolitically charged world.
• Capex maintains momentum: A substantial Rs 11.11 lakh crore capex outlay emphasizes continued support, advancing sustained economic growth.
• Green Economy Priorities: Attention to offshore wind energy, e-vehicle ecosystem, and coal capacity aligns with India\'s clean and green economic aspirations.
• Financial Catalyst: A `1-lakh-crore corpus supports low-interest financing, fostering industry R&D and technology adoption for global competitiveness.
• Atmanirbharta Commitment: Access to credit for MSMEs, deep-tech defense schemes, and financial sector re-invigoration underpin India\'s commitment to self-reliance.
• Emphasis on self-reliance: Schemes for oil seeds, comprehensive dairy farmer support, and aquaculture promotion aim at strengthening agri and allied sectors.
• Inclusive Growth: Provision of additional 2 crore houses under PMAY-G, announcement of credit incentives for middle and low income group people in urban areas to construct their own house and revised Lakhpati didi targets contribute to Inclusive growth.

Misses of the Budget
• Muted outlook on GDP growth: The nominal GDP growth for FY 2024-25 is projected at just around 10.5%. When inflation will be considered the real GDP outlook will be sub-optimal.
• Missed Capex Target in FY 2023-24: The Capex expenditure target Rs 10 lakh crore set for FY-24 set in the Budget 2023-24 has not been met. The revised estimates show that the Capex for FY-24 stands at Rs 9.5 lakh crore.
• Budget cuts in social sector schemes – Health, education
• “Core of core schemes” meant for the most disadvantaged sections of society, such as SCs, STs and minorities, have witnessed cuts.
• No increase in the budget allocation for agricultural sector.