As the interim budget is set to be presented in Parliament on February 1, it is anticipated to offer a comprehensive review of the central government's decade-long performance. The upcoming budget aims to provide relief to the middle class, address inflation concerns, sustain crucial subsidies, emphasize agriculture, promote manufacturing, saturate welfare schemes, and advance the mission of achieving a $5 trillion economy by 2027-28. Additionally, it will underscore the two-decade-long roadmap for a developed India known as Viksit Bharat, according to sources familiar with the preparations.
The interim budget, colloquially known as the vote on accounts, is seen as an opportunity for the government to reaffirm its economic vision, with a particular focus on women, youth, farmers, and marginalized communities ahead of the forthcoming parliamentary elections scheduled for the summer. Prime Minister Narendra Modi, in articulating a long-term economic vision, emphasized the four pillars of Viksit Bharat: India's women empowerment, youth empowerment, support for farmers, and assistance to impoverished families.
Finance Minister Nirmala Sitharaman is not expected to unveil major new schemes in this budget, saving potential announcements for the Bharatiya Janata Party's election manifesto. Given the nature of a vote on account, urgent and time-sensitive tax proposals are anticipated, with potential adjustments in direct taxes to provide relief to the middle class. Customs duties may also be recalibrated to boost the Make in India initiative and control essential commodity prices.
While addressing inflation concerns, the government is likely to implement tariff and non-tariff measures, particularly in response to disruptions in the Red Sea trade route. Geopolitical tensions have caused supply disruptions, leading to a rise in retail inflation. The government is keen to preemptively manage inflation and ensure it does not impact the electorate negatively before the Lok Sabha polls.
Disruptions in the Red Sea trade route due to missile attacks could result in increased prices for food, fuel, and fertilizers. Despite external factors beyond the government's control, the commitment remains to protect both farmers and consumers, with possible support for modernizing agriculture and enhancing the quality of inputs like seeds.
While the interim budget may not unveil significant announcements, it is expected to maintain continuity in the government's economic policies. Experts acknowledge the global recognition of the Modi government's economic policies, crediting them for swiftly navigating through Covid disruptions and positioning India as the fastest-growing major economy globally. Investors are keen on policy continuity, considering the economic stability provided by the current administration.
A vote on account is a customary presentation in an election year, covering expenditure for a brief period until a regular budget for the 2024-25 financial year is presented after the parliamentary polls conclude. Funds allocated under the vote on account cannot be utilized for new services or expenditures.
