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New Delhi: Key targets set in the interim budget will be continued in the full-year budget to be presented by the new government in July, two people aware of the matter said, in an effort to work within prescribed fiscal limits.
The targets, announced by finance minister Nirmala Sitharaman on 1 February, are unlikely to change even if a different government comes to power, the officials told Mint on the condition of anonymity.
The finance ministry has already started preparations for the presentation of the full budget, and various ministries have been asked to present fresh assessments of their fund requirements for the next fiscal.
Ministries have been asked to give details of schemes that need to be expanded next year and those which could be trimmed or axed to make way for any new scheme the next government may like to introduce.
“As the full budget preparations start for next year, the effort is to work within the fiscal space provided in the interim budget. So, the fiscal deficit target of 5.1% (of the GDP) for FY25 would be maintained. However, within the constraints, there would be space for new schemes, if any, as the outgo for these would be spread over several years and not just FY2025,” said one of the people mentioned above.
The general elections are set to be held in April-May and, as things stand, the full-year budget is likely to be presented in July to give a detailed roadmap for income and spending for the next fiscal.
“The government can announce major schemes without deviating from its proposed fiscal path,” the person quoted above said.
A finance ministry spokesperson didn’t respond to emailed queries.
In its interim budget for FY2025, the government gave a boost to capital expenditure by raising the allocation on infrastructure projects by 11% to ₹11.11 trillion for the year starting 1 April 2024.
The government has proposed fiscal deficit targets of 5.1% for FY25 and 4.5% or less by FY2026 continuing on its path of fiscal consolidation and bringing down the deficit to a 3% level over the next few years while eliminating revenue deficit.
In addition, the Centre’s borrowing target for FY2025 was lowered to ₹14.13 trillion from budget estimates of ₹15.43 trillion in FY24, which indicates the government’s objective to keep debt at sustainable levels, while leaving legroom for the private sector to step up borrowings and invest in capacity expansion.
Meanwhile, the Centre’s subsidy bill for food, fertilizer and cooking gas has been projected at ₹3.81 trillion in FY2025, compared with a revised estimate of ₹4.03 trillion in FY2024.
The Interim Budget 2024-25 (FY2025) estimates India’s nominal GDP to grow by 10.5 % to ₹327.7 trillion during the upcoming fiscal.
The growth is estimated to come on top of a nominal GDP of ₹293.90 trillion, as per the second advance estimates of GDP for 2023-24 released by the National Statistical Office (NSO).
The upcoming welfare schemes announced by the government should have a sunset clause, so these schemes will not lead to perennial fiscal pressure, said N.R. Bhanumurthy, vice chancellor of Dr. B.R. Ambedkar School of Economics University, Bengaluru.
“If the major welfare schemes have sunset clause long-term impact on public debt to GDP ratio will be lower,” he added.
While some social welfare schemes like the ‘Pradhan Mantri Ujjwala Yojana’ (PMUY) and Pradhan Mantri Awas Yojana (Urban) have sunset clauses, many others don’t.
A sunset law is a clause in a statute or regulation that expires automatically on a specified date. It provides for an automatic repeal of the entire or sections of the law once that sunset date is reached.
ENDS
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Published: 26 Mar 2024, 05:35 PM IST
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