Union Finance Minister Nirmala Sitharaman is slated to present the Budget for FY 2025-2026 on July 23. The first budget since Lok Sabha elections, it is expected to focus on infrastructure development through capital expenditure to drive GDP growth, and boost the economy.
The key partners in the coalition government, Telugu Desam Party (TDP) and JD (U) may also advocate strongly for benefits to their states, Andhra Pradesh and Bihar respectively.
Areas to watch out for in budget announcement:
Fiscal deficit target: The government is committed to keep and maintain the fiscal deficit target of 5.1 per cent of the GDP.
Tax cuts: The middle/ lower class may receive good news in the form of tax cuts, which translates to more savings.
Assistance to small farmers: The government may provide better financial support to farmers by increasing the annual cash payments from the current Rs 6,000 to Rs 8,000.
Increased guaranteed minimum pension: The government is contemplating doubling the current amount of Rs 1,000 to Rs 5,000 to Rs 10,000 per month under its flagship social security initiative.
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The Challenges:
As the coalition partners press for special relief and grants for their respective states, balancing fiscal discipline with their demands and upcoming elections, in states as big as Maharashtra complicates fiscal planning and presents a tough challenge.
Reportedly, fiscal demands from TDP and JD (U) amount to over half of the budget, with the government’s annual food subsidy budget being Rs 2.2 trillion.
Their may also be a possible tax cut for individuals earning between Rs 5 lakh and Rs 15 lakh annually, which is currently taxed from 5 to 20 per cent. This move aims to boost private consumption, which grew only by 4 per cent compared to 8.2 per cent GDP last fiscal year.
India is expected to grow at 10.5% in FY 2024-25, according to government estimates. As announced by Minister of Parliamentary Affairs, Kiren Rijiju, Parliament’s budget session will be held from July 22 to August 12.
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