The big numbers to watch for in this budget

Budget 2024: Taxpayers, businesses, auto, realty, IT and other industries on watch out as Sitharaman tables Interim Budget

The Vote on Account speech might be shorter and grand announcements might be fewer but the numbers presented in the interim budget remain sacrosanct. This may only be a trailer for the big finale that will follow when the new government is formed, but the macro data presented in the budget will continue to form the crux of the budget.

So, here are the big numbers to watch out for:

GDP

A review put out by the government on the Indian economy has pegged India’s growth rate at or above 7 percent for FY 24. In a world that’s struggling to grow at 2 percent, 7 percent growth is an encouraging number. There are projections for the Indian economy to clock real growth of 7 percent in FY 25 as well. S&P Global has forecast India’s GDP growth rate in 2023-24 to be 6.9% while the RBI’s projection is 7 percent. Why is this number important? Because a higher growth rate means higher economic activity, translating into higher incomes, spending power, jobs and so on.Fiscal deficit

The big number that the markets will be watching for is the fiscal deficit. How much will the government spend and how much will it have to borrow? Finance Minister Nirmala Sitharaman has said that the government intends to reduce its fiscal deficit to 4.5 percent by FY 26. The FRBM Act has fixed a target containing Central Government debt to 40 percent of GDP by 2024-25. A fiscal deficit higher than 5.2 percent could imply that the government might not be able to meet the target of 4.5% by FY 26.

Capital expenditure

The government has been steadfast in its focus on capital expenditure. Overall public sector capital investment has gone up from Rs 5.6 lakh crore in FY 15 to Rs 18.6 lakh crore in FY 24. The government has been riding high on its capex push. If the finance minister announces a low capex growth number, anything below a 15% increase could disappoint the markets.

Market borrowings

The government has a borrowing plan to meet its spending targets. It borrows money through government securities and treasury bills. When the government decides to stick to its borrowing programme, it largely keeps bond yields in check. If the government resorts to higher borrowings than projected, interest costs also go up, putting pressure on the fiscal deficit and government finances. The government borrows funds twice a year. The first part of the borrowing is shared as part of the budget announcement. The second part starts around late September or October. The Reserve Bank of India and the department of expenditure finalise how much the government will borrow. The expectation is that it could borrow around Rs15.2 lakh crore in gross terms in 2024-25, down from the Rs 15.43 lakh crore budgeted for the current financial year.

Consumption and manufacturing spends

In a pre-election budget there could be announcements that specifically target a consumption boost, a feelgood factor. Also, the government could continue with its manufacturing push through the PLI scheme. The date for incentives under the scheme could be extended and the scheme could be expanded to other sectors. Farmer welfare scheme PM Kisan could also see its allocation go up to give rural demand a boost.

Election expenditure

Keep an eye out for election expenditure, which will see a massive jump from Rs 340 crore for the current fiscal year. This number will be lurking under the law and justice header.

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