The first budget of Modi-3.0 is to be presented this week. Every section has some expectation.
Following the somewhat lukewarm response to the ruling BJP in the recent parliamentary poll, it is expected that Finance Minister Nirmala Sitharaman would offer a financial salve to the traditional support-base of the ruling party in urban and semi-urban areas. At least a higher exemption limit for middle-income tax-payers is awaited eagerly. Or a new, and inflation-beating long-term savings instrument.
A large percentage of the young employed are putting their money in share markets; an attractive savings scheme could help raise the savings rate in the economy. Retail inflation still rules uncomfortably high for the central bank to consider reduction in the prime lending rate, Sitharaman may have to unveil steps to ease the price situation. The budget comes only a few months ahead of the Assembly polls in a number of states, including Maharashtra and Haryana.
She may have to tailor-make a few proposals to ease the farmer distress particularly in those two states. Thanks to the efficient management of the economy the Centre’s fiscal situation is better than expected. In 2023-24 the budget estimate for fiscal deficit was 5.
9% of GDP. According to the interim Budget the government expects to contain it at 5.1%, no small feat given the tremendous increase in welfare and infrastructure spending.
Of course, the more than generous cheque the RBI wrote for the government went a long way .