The Union Budget 2024-25 has a special significance. It comes at a time when the Indian economy is in top gear, having clocked a stellar 8.2 per cent growth for 2023-24.
The forthcoming Budget should sustain this growth momentum. Being the first Budget of the new government, it should set the tone for the government’s reform agenda for its full term. Here, I make suggestions focusing on three pivotal issues.
First, public capex has been a key driver of India’s impressive GDP growth over the past three years. It has also facilitated large-scale employment in the construction sector, bolstered the competitiveness of the Indian industry by creating world-class infrastructure, and is crowding in private investment. Although signs of revival in private capex are evident, it remains to become broad-based.
Sustaining the momentum of public capex is crucial to fortify the private capex recovery into a broad-based investment cycle and continue with the much-needed infrastructure building. The Interim Union Budget 2024-25 increased the capex allocation by 16.8 per cent over the revised estimate of 2023-24.
This should be enhanced to 25 per cent. On the fiscal deficit front, the revised estimates for fiscal deficit for 2023-24 came in at 5.6 per cent of GDP, lower than the 5.
8 per cent of GDP estimated in the Interim Budget. Additionally, the transfer from the Reserve Bank of India has been Rs 1.1 lakh crore more than the estimates in the Interim Budget.
Given these, the glide path .