The interim Budget or ‘vote on account’ for 2024-25 was presented on February 1, 2024. In keeping with the best traditions, Finance Minister Nirmala Sitharaman announced that she was not proposing to make any changes in the tax rates either for direct taxes or indirect taxes. Nevertheless, a few things stand out in the Budget. First, there is a continued emphasis on increasing capital expenditures of the Union government and second, there is a continued emphasis on fiscal correction and consolidation.
Not overstretched
In some sense, the Budget is not overstretched. The buoyancy of tax revenue comes to 1.33, if the base is taken as Budget Estimates of the present year and using nominal GDP growth for 2023-24 as per the National Statistics Organisation’s (NSO) first advance estimates. The buoyancy comes down to 1.09 if the base is taken as Revised Estimates. The nominal GDP growth for 2024-25 is conservatively estimated at 10.5%. This means an implicit price deflator-based inflation of 3.3% if we assume a 7% real growth. Thus, the revenue projections provide a buffer that can be used to increase expenditures or reduce deficit later. That will be known only when the regular Budget is presented later.
