A FINE BALANCE

Finance minister aims to strike a balance between prioritizing growth and fiscal prudence

Finance minister Nirmala Sitharaman on Wednesday delivered an expansive budget amid global economic turmoil, striking a balance between prioritizing growth and fiscal prudence.

In the last full budget before the 2024 elections, Sitharaman tried to address the expectations of large sections of society, including the middle class, small businesses, farmers, women, and high networth individuals, offering sops and new schemes.

With nine assembly elections in 2023 and the 2024 general elections looming on the horizon, the Union budget offers glimpses of the ruling Bharatiya Janata Party's playbook for the next two years.

"First budget of the Amrit Kaal lays a strong foundation for the aspirations and resolutions of a developed India," said Prime Minister Narendra Modi, reacting to the proposals.

Sitharaman's budget offered a blend of measures designed to spur consumption, such as income tax relief for the middle class, high earners, and working professionals, and a record 10 trillion allocation for capital spending to stoke growth and job creation.

Experts lauded the budget for sticking to the fiscal consolidation path and targeting to contain fiscal deficit to 5.9% of GDP in the year starting 1 April from 6.4% of GDP in FY23.

Sitharaman reiterated the government's intention to keep the fiscal deficit below 4.5% of GDP by 2025-26.

"This was a workman-like budget that was a pleasant surprise. No big stuff. The capex push has been the key focus area over the last few years. What I liked especially was that there were no tall promises, especially as elections are around the corner," said Pronab Sen, an economist and former chairman of the National Statistical Commission.

However, financing the fiscal deficit could pose a challenge to the government, according to N.R. Bhanumurthy, vice chancellor of BASE University.