Budget 2024 Expectations Highlights: Economic Survey highlights strengths, outcomes of reforms, says PM Modi

Fiscal Deficit: The budgeted fiscal deficit, which is the difference between the government expenditure and income, for the current fiscal is 5.1 per cent as projected in the Interim Budget in February, against 5.8 per cent in the last fiscal year. The full Budget is expected to provide better-than-earlier projections as there has been tax buoyancy. The government has projected fiscal deficit at 4.5 per cent of the GDP in FY26.

Capital Expenditure: The government's planned capital expenditure for this fiscal year is budgeted at Rs 11.1 lakh crore, higher than Rs 9.5 lakh crore in the last fiscal year. The government has been pushing infrastructure creation and also incentivising states to step up capex.

Tax Revenue: The Interim Budget had pegged gross tax revenue at Rs 38.31 lakh crore for 2024-25, an 11.46 per cent growth over the last fiscal. This includes Rs 21.99 lakh crore estimated to come from direct taxes (personal income tax + corporate tax), and Rs 16.22 lakh crore from indirect taxes (customs + excise duty + GST).

GST: Goods and Services Tax (GST) collection in 2024-25 is estimated to rise to Rs 10.68 lakh crore, an increase of 11.6 per cent. The tax revenue figures will have to be watched out for in the final Budget for the 2024-25 fiscal year.

Borrowing: The government's gross borrowing Budget was Rs 14.13 lakh crore in the current financial year as per the Interim Budget. The government borrows from the market to fund its fiscal deficit. The borrowing number will be watched by the market, especially on the back of more-than-expected dividend from the RBI and financial institutions.

Nominal GDP: India's nominal GDP growth (real GDP plus inflation) in the current fiscal year is estimated to be 10.5 per cent to Rs 327.7 trillion as per the Interim Budget. In view of expected normal monsoon, improvement in revenue collections and pick up in rural consumption, is expected that there could be upward revision in growth estimate. Real GDP growth in current fiscal is projected at 7.2 per cent, as per the RBI.

Dividend: The interim Budget had projected Rs 1.02 lakh crore from RBI and financial institutions. This will be revised upwards as the RBI has already made surplus transfer of Rs 2.11 lakh crore earlier in May. At the same time, Rs 43,000 crore expected to be garnered from CPSEs.
Spotlight would also be on spending on key schemes, like NREGA, as well as key sectors like health and education.

The Indian government has increased its budget for the welfare and empowerment of women, marking a 218.8 per cent rise from FY14 to FY25.

The surge underscores India's commitment to transitioning from women's development to women-led development, as highlighted in the Economic Survey 2023-2024.

Presented today in Parliament by Union Finance and Corporate Affairs Minister Nirmala Sitharaman, the Survey emphasises the resilience of the Indian economy and its stable post-COVID recovery, according to a press release by the Ministry of Finance.

The Survey underscores the government's commitment to "Nari Shakti" through various legislative measures and provisions aimed at boosting women's participation in diverse professions.

According to the Economic Survey, the budget for women's welfare and empowerment schemes has surged by 218.8 per cent, growing from Rs 97,134 crore (BE) in FY14 to Rs 3.10 lakh crore in FY25.

"It also identifies areas for further growth and progress as we move towards building a Viksit Bharat," he added.

Economic think tank GTRI on Monday urged the government to cut import duty on smartphone components in the Budget as it could lead to an increase in superficial assembly plants that rely heavily on imported parts.

"Do not cut import duty on smartphone components in this Budget. Removing tariffs could lead to an increase in superficial assembly plants that rely heavily on imported parts, contributing little to the local economy.

"Imported components and subassemblies account for up to 90 per cent of the bill of material value for an India-made phones," GTRI Founder Ajay Srivastava said.

The stock market experienced a downturn on Monday, with the benchmark Sensex falling by 102 points. This decline was primarily attributed to the selling of shares in Reliance Industries and Kotak Bank, both of which are heavyweight components of the index. The muted earnings reports from these companies, coupled with cautious sentiment ahead of the Union Budget, contributed to the market's negative performance. The Sensex, which consists of 30 shares, closed at 80,502.08, marking a 0.13 per cent decrease. During the trading session, the barometer dropped by 504 points or 0.62 per cent, reaching an intra-day low of 80,100.65.However, the index managed to recover most of its losses as Infosys and HDFC Bank shares advanced.

The broader Nifty of the NSE dipped 21.65 points or 0.09 per cent to 24,509.25. During the day, it dropped 168.6 points or 0.68 per cent to 24,362.30.

Among Sensex shares, Reliance Industries declined over 3 per cent after the company reported a 5 per cent drop in its June quarter net profit.

Kotak Mahindra Bank also fell more than 3 per cent after its June quarter earnings failed to cheer investors. ITC, State Bank of India, HCL Technologies and IndusInd Bank were the other big laggards in Sensex shares.

Tax policies will have a major role to play in tackling income inequality in the coming years as deployment of technology, like AI, can have a more deleterious impact on employment and income, the Economic Survey said on Monday. It said globally, widening inequality is emerging as a crucial economic challenge confronting policymakers.

The 2022 State of Inequality in India report observed that in India, the top 1 per cent accounts for 6-7 per cent of the total incomes earned, while the top 10 per cent accounts for one-third of total incomes earned.

Asserting that Parliament is not for 'dal' but for 'desh', Prime Minister Narendra Modi on Monday hit out at the opposition, saying that some parties have practised "negative politics" and "misused" Parliament to hide their political failures. Speaking with the media ahead of the start of Parliament session, Modi said the Union Budget, which will be presented on Tuesday, will set the direction for the journey of the next five years and lay the foundation for fulfilling the dream of 'Viksit Bharat' in 2047.
Modi said people have given their verdict in the Lok Sabha polls and now all political parties must fight together for the country for the next five years.

"I want to tell all MPs, they may be of any party, that from January onwards we fought a pitched electoral battle, we conveyed to the people what we wanted to convey, some showed the way while others misled, but that period is over now. The people have given their verdict," he said.

"Now it is the responsibility of all elected representatives and that of all political parties that we have fought for our respective parties and now for the next five years, we have to fight for the country and strive for it," Modi said.

The CEA said that India's contribution to global value chain trade has increased multiple folds and also added that turnaround times in Indian ports have improved.

"Private capex has recovered after decline seen in 2021," CEA said.

CEA Anantha Nageswararan says the country will have to chart a path towards 'Viksit Bharat' amid global headwinds.

India is a GCC favourite in a hugely competitive global market, the Economic Survey said on Monday asserting that the government has a crucial role in facilitating entry of global players keen on setting up Global Capability Centre operations here.

Lauding India's success story on the GCC front, the Survey said government support for identifying new business models for partnerships, simplifying the entry process, and emphasising trust and data security, among others, will further encourage the location of GCCs in India.

"We all needs hands on table," says chief economic advisor

* Indian labour market indicators have improved in the last six years, with the unemployment rate declining to 3.2 per cent in 2022-23.
* Rising youth and female participation in the workforce presents an opportunity to tap the demographic and gender dividend.
* The net payroll additions under EPFO have more than doubled in the past five years, signalling healthy growth in formal employment.
* With artificial intelligence taking root in several spheres of economic activity, steering technological choices towards collective welfare is key. Employers owe it to themselves to strike a balance between deploying technology and labour.
* To generate and sustain quality employment, agro-processing and care economy are two promising candidates.
* The Government has implemented measures to boost employment, foster self-employment, and promote worker welfare.
* The rise in the number of candidates undergoing skill development through the Government’s flagship programmes has underlined the thrust to ‘Skill India’.
* Many regulatory chokeholds, such as those related to land use, building codes, restricting sectors and hours open to women’s employment, hold back employment generation. Releasing them is guaranteed to boost employment and raise women’s labour force participation rate.

In FY24, the US Dollar gained against virtually every major peer. The Rupee also came under depreciation pressure. However, INR was one of the least volatile major currencies. Further, it exhibited the lowest volatility in FY24 compared to the previous years.

he pre-budget Economic Survey on Monday underscored the pressing need for comprehensive reforms in India's agricultural sector, citing structural issues that could impede the country's overall economic growth trajectory. The Survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, identifies several key challenges facing the agriculture sector, including the need to sustain growth while managing food price inflation, improving price discovery mechanisms, and addressing land fragmentation.
"Despite its centrality in India's growth trajectory, the agriculture sector continues to face structural issues that have implications for India's economic growth," the Survey said.

According to the document, policymakers must strike a delicate balance between incentivizing farmers to increase production and keeping food prices within acceptable limits. This dual objective requires careful policy interventions, the Survey noted.

Will China plus one result in a total movement of trading relations away from China? This may not be the case. Take, for example, nations like Mexico, Vietnam, Taiwan and Korea, which were direct beneficiaries of the US’s trade diversion from China. Even while these nations increased their share of exports to the US, they also displayed a concomitant rise in Chinese FDI.106 Therefore, the world cannot completely look past China, even as it pursues China plus one, says the Economic Survey 2023-24.

* The Indian economy is moving forward with a reformed approach to welfare, focused on empowerment, saturation approach, universal access to necessities, efficiency, cost-effectiveness, and enhanced participation of the private sector and civil society.
* The education sector is bustling with the across-the-board transformation led by the NEP 2020, focusing on Foundational Literacy and Numeracy for every child passing the third standard. The ‘Poshan bhi Padhai bhi’ programme for early childhood education aims to develop the world’s largest, universal, high-quality preschool network at Anganwadi Centres.
* In healthcare, Ayushman Bharat is not only saving lives but also saving generations from the debt trap. More than 34.7 crore Ayushman Bharat cards have been generated, and the scheme has covered 7.37 crore hospital admissions. Considering the multiplier effect of low costs, the scheme saves more than 1.25 lakh crore of out-of-pocket expenditure for poor and deprived families.

* India’s external sector remained strong amidst on-going geopolitical headwinds accompanied by sticky inflation.
* India’s rank in the World Bank’s Logistics Performance Index improved by six places, from 44th in 2018 to 38th in 2023, out of 139 countries.
* India is adding more export destinations, signalling regional diversification of exports.
* The moderation in merchandise imports and rising services exports have improved India’s current account deficit which narrowed 0.7 per cent in FY24.
* India’s services exports grew by 4.9 per cent to USD 341.1 billion in FY24, with growth largely driven by IT/software services and ‘other’ business services.
* India is the top remittance recipient country globally, with remittances reaching a milestone of USD 120 billion in 2023.

Between the last Economic survey published in January 2023 and this one, big changes are afoot in the geopolitical environment. The global backdrop for India’s march towards Viksit Bharat in 2047 could not be more different from what it was during the rise of China between 1980 and 2015. Then, globalisation was at the cusp of its long expansion. Geopolitics was largely calm with the end of the Cold War, and Western powers welcomed and even encouraged the rise of China and its integration into the world economy. Concerns over climate change and global warming were not so pervasive or grave then as they are now. Fourth, the advent of Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels – low, semi and high. These will create barriers and hurdles to sustained high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of union and state governments and the private sector.

“The pandemic and subsequent geo-political tensions presented considerable challenges to the global economy in inflation management. The supply disruptions inflicted by the pandemic and increased commodity prices caused by heightened global conflicts markedly affected India. As a result, FY22 and FY23 witnessed price pressures in core consumer goods and services. Food prices were affected by adverse weather conditions in the last two years. The net impact of these developments was elevated inflationary pressures in FY23 and FY24. Prudent monetary policy response and calibrated trade policy measures by the Government, coupled with strong output growth, helped reduce core inflation to a four-year low in FY24. Appropriate administrative actions, including dynamic stock management, open market operations, subsidised provision of essential food items and trade policy measures, helped mitigate food inflation to a great extent. The expectation of a normal monsoon and moderating global prices of key imported items give credence to the benign and range-bound inflation projections for India made by the Reserve Bank of India and the International Monetary Fund. Beyond this, the medium to long-term inflation outlook will be shaped by the strengthening of price monitoring mechanisms and market intelligence as well as focussed efforts to increase the domestic production of essential food items like pulses and edible oils for which India has a great degree of import dependence,” says the Economic Survey 2023-24.

* Going forward, the RBI projects inflation to fall to 4.5 per cent in FY25 and 4.1 per cent in FY26, assuming normal monsoon and no external or policy shocks. Similarly, the IMF forecasts inflation of 4.6 per cent in 2024 and 4.2 per cent in 2025 for India.
* Further, the World Bank predicts declining global commodity prices in 2024 and 2025, driven by lower energy, food, and fertiliser prices. This may help bring down domestic inflation in India.
* However, achieving long-term price stability requires a clear forward-looking vision. Hence assessing progress in developing modern storage and processing facilities for fruits and vegetables is crucial to manage seasonal price spikes.

Inflationary pressures stoked by global troubles, supply chain disruptions, and vagaries of monsoons have been deftly managed by administrative and monetary policy responses. As a result, after averaging 6.7 per cent in FY23, retail inflation declined to 5.4 per cent in FY24.

Indian economy has recovered and expanded in an orderly fashion post pandemic. The real GDP in FY24 was 20 per cent higher than its level in FY20, a feat that only a very few major economies achieved. Prospects for continued strong growth in FY25 beyond look good, subject to geopolitical, financial market and climatic risks.

* The Government’s thrust on capex and sustained momentum in private investment has boosted capital formation growth. Gross Fixed Capital Formation increased by 9 per cent in real terms in 2023-24.
* Moving forward, healthier corporate and bank balance sheets will further strengthen private investment. The positive trends in residential real estate market indicate that the household sector capital formation is increasing significantly.

Any escalation of geopolitical conflicts in 2024 may lead to supply dislocations, higher commodity prices, reviving inflationary pressures and stalling monetary policy easing with potential repercussions for capital flows. This can also influence RBI’s monetary policy stance. The global trade outlook for 2024 remains positive, with merchandise trade expected to pick up after registering a contraction in volumes in 2023. Conversely, increased fragmentation along geopolitical lines and renewed thrust on protectionism may distort merchandise trade growth, impacting India’s external sector. Global financial markets have scaled new heights, with investors betting on global economic expansion. However, any corrections in the elevated financial market valuations may have ramifications for household finances and corporate valuation, negatively impacting growth prospects. Hiring in the information technology sector had slowed down considerably in FY24, and even if hiring does not decline further, it is unlikely to pick up significantly. However, leveraging the initiatives taken by the government and capturing the untapped potential in emerging markets, exports of business, consultancy and IT-enabled services can expand. Despite the core inflation rate being around 3 per cent, the RBI, with one eye on the withdrawal of accommodation and another on the US Fed, has kept interest rates unchanged for quite some time, and the anticipated easing has been delayed.

The Indian economy recovered swiftly from the pandemic, with its real GDP in FY24 being 20 per cent higher than the pre-COVID, FY20 levels. This meant a CAGR of 4.6 per cent from FY20, despite a 5.8 per cent decline in FY21 inflicted by the pandemic. Analysis in this chapter shows that the current GDP level is close to the pre-pandemic trajectory in Q4FY24. During the decade ending FY20, India grew at an average annual rate of 6.6 per cent, more or less reflecting the long-run growth prospects of the economy. This is the background against which we can see the prospects for FY25.

IMF projects the global economy to grow at 3.2 per cent in 2024, with risks being broadly balanced. The average annual global growth was 3.7 per cent during the decade ending FY20. Inflationary pressures have moderated in most economies with declining global commodity prices and easing of supply chain pressures. However, core inflation remains sticky and driven by high service inflation. Many central banks have hinted at the peaking of the interest rate hike cycle. The ECB has already cut the policy rate, while the Fed has hinted at reducing the rate in 2024. If the services inflation across economies moderates faster, that may allow central banks to bring forward the monetary policy easing cycle earlier than currently anticipated. A likely reduction in policy rates by central banks of AEs, especially the Fed, will open the space for central banks of EMEs to follow the lead, bringing down the cost of capital.

"Domestic growth drivers have supported economic growth in FY24 despite uncertain global economic performance. Improved balance sheets will help the private sector cater to strong investment demand. A note of caution is warranted here. Private capital formation after good growth in the last three years may turn slightly more cautious because of fears of cheaper imports from countries that have excess capacity. While merchandise exports are likely to increase with improving growth prospects in AEs, services exports are also likely to witness a further uptick. A normal rainfall forecast by the India Meteorological Department and the satisfactory spread of the southwest monsoon thus far are likely to improve agriculture sector performance and support the revival of rural demand. However, the monsoon season still has some ways to go. Structural reforms such as the GST and the IBC have also matured and are delivering envisaged results. Considering these factors, the Survey conservatively projects a real GDP growth of 6.5–7 per cent, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side," says Economic Survey 2023-24.

The Economic Survey says that it conservatively projects a real GDP growth of 6.5–7 per cent, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side

“On the employment front, according to the annual PLFS, the all-India annual unemployment rate (persons aged 15 years and above, as per usual status) has been declining since the pandemic. This has been accompanied by a rise in the labour force participation rate and worker-to-population ratio. Even by the relatively strict standards of current weekly status, employment has recovered from the pandemic in urban and rural areas. From the gender perspective, the female labour force participation rate has been rising for six years, i.e., from 23.3 per cent in 2017-18 to 37 per cent in 2022-23, driven mainly by the rising participation of rural women,” says the Economic Survey 2023-24.

“India’s economy carried forward the momentum it built in FY23 into FY24 despite a gamut of global and external challenges. The focus on maintaining macroeconomic stability ensured that these challenges had minimal impact on India’s economy. As a result, India’s real GDP grew by 8.2 per cent in FY24, posting growth of over 7 per cent for a third consecutive year, driven by stable consumption demand and steadily improving investment demand. On the supply side, gross value added (GVA) at 2011-12 prices grew by 7.2 per cent in FY24, with growth remaining broad-based. Net taxes at constant (2011-12) prices grew by 19.1 per cent in FY24, aided by reasonably strong tax growth, both at the centre and state levels and rationalisation of subsidy expenditure. This led to the difference between GDP and GVA growth in FY24,” says the Economic Survey 2023-24.

Chief Economic Adviser to the Government of India, Dr. V. Anantha Nageswaran will hold a press conference at 2:30 PM today to detail the Economic Survey 2023-24 findings. FM Nirmala Sitharaman has tabled the Economic Survey in the Lok Sabha today.

Ahead of the Union Budget 2024, Finance Minister Nirmala Sitharaman tabled the government’s report card - the Economic Survey 2023-24 - in the Parliament.

“This Budget will set the direction of the next five years of the current government and will lay a strong foundation for the dream of Viksit Bharat by 2047”, PM Modi said.

He highlighted that India is the fastest growing country among the major economies with about 8 percent growth in the last three consecutive years. Today, opportunities are at the peak due to positive outlook, investment and performance, he said.

Economic Survey Live: Finance Minister Nirmala Sitharaman will table the Economic Survey 2023-24 in the Parliament shortly. The Parliament's Budget session has begun today and the Union Budget 2024 will be presented by Sitharaman on July 23, 2024.

"This government will make a record of paper leaks... There are some centres where more than 2,000 students have passed. As long as this minister (Education Minister Dharmendra Pradhan) is there, the students will not get justice."

The NEET issue was raised in the parliament and Education minister defended the government's action by blaming the opposition of acting with an agenda, when it was the UPA government which bought that.

"Mantri blaming everyone but himself. The rich can buy education but the poor cant afford"

NEET as per SC norms, opposition playing politics. It was brought by UPA government

The Economic Survey, an annual document, is prepared by the Economic Division of the Department of Economic Affairs under the Ministry of Finance, with guidance from the chief economic adviser. This survey aims to provide a comprehensive overview of the economy's performance during the previous financial year, along with key indicators and projections for the current year. It will also offer valuable insights into the potential direction of the upcoming Union Budget for 2024-25.

First introduced in 1950-51 as part of the budget documents, the Economic Survey was later separated from the Budget in the 1960s and is now presented a day before the Union Budget. The central theme of the survey is eagerly anticipated by various stakeholders.

Apart from the regular sectoral chapters, the Survey often includes new chapters that address specific areas requiring attention. The finance minister's major announcements and the government's forward-looking guidance on the overall economy will be the primary focus of attention in this year's Economic Survey.

"...We want the Finance Minister to address the real issues of jobless India, inflation, states being discriminated which are ruled by the opposition parties. We know that the government is working for the super-rich. They always forget the ordinary man in the whole game. In the past 10 years, we have seen such budgets which supported the super-rich and left the middle class, lower middle class and poor... They should be addressed..."

Prime Minister Narendra Modi says "...It is a matter of pride that after 60 years, a government has come to power for the third time and will present the first Budget for the third time...I have been giving guarantees to the people of the country and our mission is to bring this to the ground. This Budget is important budget for Amrit Kaal. Today's budget will decide the direction for the next 5 years of our term. This budget will also become a strong foundation of our dream of 'Viksit Bharat'..."

"Today is the first Monday of Sawan. An important session is starting on this auspicious day. I extend my greetings to the countrymen on the first Monday of Sawan. The monsoon session of Parliament is starting today. Today the whole country is looking at it. This should be a positive session..."

"Some parties doing negative politics, get rid of past bitterness and come together," says PM Modi

"I would like to request all the MPs of the country that from January till now we have fought as much as we had to, but now that period is over, the public has given its verdict. I would like to ask all the parties to rise above party lines and dedicate themselves to the country and use this dignified platform of Parliament for the next 4.5 years. In the election year of January 2029, you can play any game, but till then we should participate for the empowerment of the farmers, youth and the country..."

'Viksit Bharat goal will be achieved by 2047', says PM Modi ahead of Budget session