Union Budget 2024 | 'Focus on structural improvements, incremental steps to take economy towards Viksit Bharat', says Executive Director of DBS Bank

Rao also said that the nominal GDP forecast was maintained with conservative tax buoyancy assumptions, leaving the room for additional revenue cushion.

Union Finance Minister Nirmala Sitharaman presented the Union Budget for 2024-25 on Tuesday, her seventh straight presentation, surpassing the record of former prime minister Morarji Desai.

This is the first budget in Prime Minister Narendra Modi-led government's third term in office.

Radhika Rao, Executive Director and Senior Economist, DBS Bank said, "Faced by a trade-off between fiscal consolidation and expectations for measures to boost demand, the FY25 Budget struck a fine balance by continuing to consolidate finances while also tackling social sector demands, with a focus on saving over spending. The strong revenue handover from the prior year was evenly split between tightening the fiscal deficit target by a further 20bp to - 4.9 per cent of GDP vs the interim budget and rest towards the increase in revenue spending. Nominal GDP forecast was maintained with conservative tax buoyancy assumptions, leaving the room for additional revenue cushion."

"The budget also focuses on structural improvements, including efforts to boost job creation and skills development, promoting exports through adjustments in import tariffs, and making direct tax changes such as reducing corporate tax for foreign firms and increasing capital gains tax as a cautious preventative measure. Overall, Budget measures were focused on incremental steps towards taking the economy towards the Viksit Bharat 2047 goalpost of reaching a ‘Developed India’ status."

"Additionally, fiscal consolidation and macroeconomic prudence were prioritised, tightening the FY25 fiscal deficit by a cumulative 70bp to -4.9 per cent of GDP (vs interim -5.1 per cent) compared to -5.6 per cent of GDP in FY24, aiming to consolidate finances without imparting a negative impulse to growth and demand. This aims to consolidate finances while avoiding a negative impact on growth and demand. The revenue from the RBI’s surplus transfer and robust direct tax collections was allocated between reducing the fiscal deficit and increasing revenue expenditure. Looking ahead, the government has signaled a continued reduction in both deficit and debt levels, aiming for around -4.5 per cent of GDP by FY26. This adjustment in the fiscal stance is expected to lead to better expenditure quality and reduced borrowing costs due to lower yields," she added

Union Budget 2024 LIVE | Making a record for any Finance Minister, Nirmala Sitharaman presented her 7th consecutive Union Budget on July 23, 2024 under the Modi 3.0 government. This Budget brought tax relief for the middle class, while focusing on jobs through skilling, incentivising employers. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.