India 2024 Economic Survey Highlights and Budget Proposals

Finance Minister Nirmala Sitaraman submitted the 2024 economic survey to the Diet today. In the same survey, the real GDP growth rate for fiscal year 25 was predicted to be 6.5-7%, and the risks were balanced. Market expectations are high, highlighting the potential impact of rising geopolitical uncertainty on capital movements.

Key figures to watch

Finance Minister Nirmala Sitaraman will announce the 7th consecutive budget on Tuesday showing a roadmap to Vikshit Bharat (advanced India) until 2047 while showing a glimpse of performance 10 years from now.

Finance Minister Sitaraman has set out the expected tax reduction measures for the middle income group, and attention is being paid to whether more funds will be distributed to the middle income group as the tax system improves. Also, the market expects to maintain a fiscal glide path that reduces the budget deficit to 4.5% of GDP by 2025-26.

Prime Minister Sitaraman, who will announce the budget for 7 consecutive years, changed leather briefcases that have been used for decades to carry budget documents to traditional “bahikata” wrapped in red cloth in the first budget of 2019. This year's budget will be in a paperless format, similar to the past 3 years.

The following are the main figures that are attracting attention in the Modi 3.0 initial budget: * Budget deficit: Budget deficit: The budget deficit, which is the difference between government expenditure and revenue, is 5.1% in the February interim budget compared to 5.8% last fiscal year. Since tax system levitation is seen in this budget, it is expected to exceed the previous one.

The government predicts a fiscal deficit of 4.5% of GDP for fiscal year 26.

* Capital expenditure Capital expenditure: The capital expenditure plan for this year is 11.1 rupees, which is higher than last year's 9.5 rupees. The government is promoting infrastructure development and giving incentives to states to promote capital investment.

* According to the mid-tax revenue budget, total tax revenue for 2024-25 was 3.831 billion rupees, up 11.46% from the previous fiscal year. The breakdown is direct tax (personal income tax+corporate tax) is 2.199 billion rupees, and indirect tax (tariff+excise tax+GST) is 1.622 billion rupees.

* GST: Goods and Services Tax (GST) collections in 2024-25 are estimated to increase 11.6% to 1.068 billion rupees. In the final budget for the 2024-25 fiscal year, it is necessary to pay attention to tax revenue figures.

* Borrowings The government's total borrowing budget was 14.13 lacakras for the current fiscal year, according to the interim budget. The government borrows money from the market to cover the budget deficit. In particular, borrowing figures are attracting attention in the market against the backdrop of dividends greater than expected from RBI and financial institutions.

* Nominal GDP: Nominal GDP: India's nominal GDP growth rate (real GDP plus inflation rate) for the current fiscal year is expected to increase 10.5% to 327.7 trillion rupees in the interim budget. There is a possibility that growth rate estimates will be revised upward when considering the expected average monsoon, improvements in revenue, and a pick-up in consumption in rural areas. According to the RBI, real GDP growth for the current fiscal year is expected to be 7.2%.

* Dividends: In the interim budget, dividends of 1 billion 20 million rupees were expected from the RBI and financial institutions. This will be revised upward as RBI has already transferred a surplus of 2.11 billion rupees in May.

At the same time, 0.04 million3,000 rupees are expected to be obtained from CPSE.

* Attention will also be drawn to major schemes such as NREGA and spending on key sectors such as health and education.