The 17th Lok Sabha’s last session is slated to take place from January 31 to February 9. On February 1, Union Finance Minister Nirmala Sitharaman is expected to deliver the interim budget. Following this year’s general elections and the establishment of the new administration, the complete budget for the fiscal year 2024–25 will be revealed.
Government’s Financial Plan
The government is probably going to keep up its trend of raising capital expenditures in the next Budget, particularly for the infrastructure sector, in order to spur economic growth. “We estimate Government of India to budget for a capex of ₹10.2 lakh crore in FY25, implying a relatively sedate YoY expansion of about 10 per cent, compared to over 20 per cent expansion seen in each of post-COVID years. The slowdown in capex growth is likely to have some bearing on economic activity and GDP growth,” said ICRA in its pre-Budget expectations.
During April-November of the current fiscal year, the capex rose by 31 per cent to ₹5.9 lakh crore (58.5 per cent of FY2024 BE) from ₹4.5 lakh in April-November FY23 (60.7 per cent of FY23 Prov).
The government has allocated a record-breaking ₹10 lakh crore for capital expenditures (capex) for the current fiscal year. The government allocated ₹4.39 lakh crore for the fiscal 2020–21 year, however that amount rose by 35% to ₹5.54 lakh crore the following year. In fiscal 2022–2023, capex increased by an additional 35% to ₹7.5 lakh crore. This amount eventually rose to ₹10 lakh crore, a 37.4% increase.
Capital spending fell in October 2023 (-14.9 percent; the first decline since April 2023) despite the continued strong economic growth, and then marginally increased by 1.6% in November 2023. The Budget has been giving capital expenditures more attention since COVID-19. It has sparked the economy’s dormant cycle. India’s economy has grown at the fastest rate among the world’s major economies over the last three years, with above 7% growth.
Private funding has increased recently in a few industries, including the steel, cement, and petroleum sectors.
More money for women in election sector
Compared to the growth above 20% seen in each of the post-COVID years, ICRA projects that the government would put aside ₹10.2 lakh crore for capital expenditures in FY25, representing a relatively low YoY increase of roughly 10%.
ICRA estimates that the government would set aside ₹10.2 lakh crore for capital expenditures in FY25, indicating a very modest YoY increase of about 10% as opposed to the expansion above 20% observed in each of the post-COVID years. Compared to the growth above 20% seen in each of the post-COVID years, ICRA projects that the government would put aside ₹10.2 lakh crore for capital expenditures in FY25, representing a relatively low YoY increase of roughly 10%.
How is the Budget prepared
Working with high-ranking personnel, the finance minister prepares the budget in a private manner. Until the budget is formally delivered, those involved in this process are subject to a period of lockdown and are not allowed to use mobile phones. Estimates are prepared by a number of agencies, such as ministries, states, union territories, defence forces, and other departments. Only when the prime minister gives his or her permission does the budget go to print.
By: Gursharan Kaur