Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman, presented the Union Budget 2024-25 in Parliament, showcasing the resilience and robustness of the Indian economy amidst a challenging global landscape. The budget emphasizes fiscal discipline, inclusive economic growth, and strategic capital expenditure to drive development.

Macro-Economic Framework

The Macro-Economic Framework Statement highlights the resilience of the Indian economy, with a focus on reducing the fiscal deficit to below 4.5% of GDP by FY26. The government’s commitment to inclusive economic growth is reflected in the budget’s provisions and targets.

Economic Growth Projections

India’s economic growth remains strong, with real growth projected at 8.2% and nominal growth at 9.6% in FY24. Private consumption has increased by 4.0%, indicating robust domestic demand. The Reserve Bank of India (RBI) projects a growth rate of 7.2% for FY25, supported by strong corporate and bank balance sheets, along with significant capital expenditure.

Inflation and Fiscal Deficit

Retail inflation has eased to 5.4% in 2023-24 from 6.7% in FY23, reflecting effective monetary policies and stable commodity prices. The fiscal deficit for 2024-25 is estimated at 4.9% of GDP, down from 5.6% in FY24. The revenue deficit has also reduced to 2.6%, with an ambitious target of 1.8% for FY25.

Capital Expenditure

The budget allocates US$ 132.81 billion (Rs. 11,11,111 crore) for capital expenditure, which is 3.4% of GDP. This includes US$ 17.93 billion (Rs. 1,50,000 crore) earmarked for state financial assistance. This significant investment aims to boost infrastructure development and economic growth.

Fiscal Indicators and Borrowing

Key fiscal indicators for FY25 include a fiscal deficit of 4.9%, a revenue deficit of 1.8%, and Central Government debt at 56.8% of GDP. Gross market borrowings are estimated at US$ 167.46 billion (Rs. 14.01 lakh crore), with net market borrowings at US$ 139.02 billion (Rs. 11.63 lakh crore).

Banking Sector Performance

The Gross Non-Performing Assets (GNPA) ratio of Scheduled Commercial Banks has significantly reduced to 2.8% in March 2024, indicating improved asset quality and financial stability in the banking sector.

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Revenue Projections

Gross Tax Revenue (GTR) is projected to grow by 11.7% over the Revised Estimate (RE) of 2023-24, reaching US$ 459 billion (Rs. 38.40 lakh crore), which is 11.8% of GDP. GST receipts are estimated at US$ 126.94 billion (Rs. 10.62 lakh crore) for 2024-25, representing a growth of 11.0% over FY24.

Expenditure Growth

The total expenditure of the Union Government grew by 5.9% in FY24, reflecting robust tax collection growth and continued buoyancy in revenue receipts. This growth is driven by strategic investments in infrastructure, social welfare, and economic development programs.

Conclusion

The Union Budget 2024-25, presented by Ms. Nirmala Sitharaman, underscores the Indian government’s commitment to fiscal discipline and inclusive economic growth. With a clear focus on reducing the fiscal deficit, boosting capital expenditure, and maintaining robust revenue growth, the budget lays a strong foundation for sustained economic resilience and development.

The budget's emphasis on reducing the fiscal deficit to below 4.5% of GDP by FY26, along with significant capital investments, reflects a balanced approach towards achieving fiscal prudence and economic expansion. As India navigates the complexities of the global economic landscape, the Union Budget 2024-25 sets a strategic path for long-term prosperity and stability.

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