Prime Minister Narendra Modi’s third term promises continuity in policy with Finance Minister Nirmala Sitharaman at the helm. Next month, Sitharaman will present the first annual budget of Modi 3.0, outlining the government’s economic agenda and setting the stage for India’s financial future.
Leadership and Resilience
Sitharaman has served as the Finance Minister since 2019, becoming the first full-time woman to hold this position in independent India. Under her leadership, India has navigated the COVID-19 pandemic with a series of policy measures aimed at supporting the poor and maintaining its status as the world’s fastest-growing major economy.
Balancing Growth and Inflation
Sitharaman faces the challenge of boosting growth without exacerbating inflation. She must also find resources to meet the coalition government’s commitments. The economic agenda aims to accelerate reforms, with the goal of making India a USD 5-trillion economy and achieving ‘Viksit Bharat’ (Developed India) status by 2047.
Economic Outlook
Last week, the Reserve Bank of India (RBI) projected a 7.2% growth rate for the current fiscal year, supported by improving rural demand and moderating inflation. The new government inherits a robust economy characterized by fiscal prudence and a record dividend of Rs 2.11 lakh crore from the RBI for FY24.
Key Policy Priorities
The Modi 3.0 government will focus on several key areas:
- Agriculture Sector Stress: Addressing issues in the agriculture sector remains a priority.
- Job Creation: Implementing measures to generate employment opportunities.
- Sustaining Capex Momentum: Maintaining capital expenditure momentum to drive economic growth.
- Revenue Growth: Enhancing revenue streams to adhere to the fiscal consolidation path.
Positive Economic Policies
Rating agency S&P has endorsed the Modi government’s economic policies, upgrading India’s sovereign rating outlook to positive. S&P indicated a possible rating upgrade in the next 1-2 years if the government adheres to its fiscal deficit roadmap.
Challenges in Revenue and Reforms
While tax revenues appear strong, non-tax revenues present a challenge. Strategic disinvestment efforts have stalled, with no significant sales except for Air India. Several CPSEs, including Shipping Corporation, NMDC Steel Ltd, BEML, PDIL, and HLL Lifecare, await strategic sales. IDBI Bank’s sale remains delayed due to security and clearance issues.
Banking Sector Reforms
Banking sector reforms face resistance. The government has struggled to advance its policy of privatizing some public sector banks and insurance companies.
GST Reforms
GST collections have been steady, but the GST Council must undertake tax rate and slab rationalization to usher in GST 2.0. Sitharaman, as the chair of the GST Council, will need to navigate these complex reforms. http://news18.com
Interim Budget 2024
In the interim budget presented on February 1, Sitharaman emphasized inclusivity. She highlighted that structural reforms, pro-people programs, and employment opportunities have invigorated the economy. The government’s focus remains on four key groups: the poor (Garib), women (Mahilayein), youth (Yuva), and farmers (Annadata).
Empowering India’s Future :Nirmala Sitharaman
The upcoming budget will lay out a comprehensive roadmap for India’s economic future. Sitharaman’s leadership and the government’s strategic focus aim to empower all segments of society, driving the nation towards sustained growth and development. As India prepares for this new phase, the world watches closely, anticipating the steps that will shape the country’s financial landscape. http://viralenews.com
