Anticipated Policy Reforms in Interim Budget FY 2024-25 as India Eyes Strong Economic Recovery

As the central government gears up to unveil the interim Budget for the fiscal year 2024-25 on February 1, 2024, speculation is rife about potential policy and reform announcements. Although interim budgets usually avoid major changes due to coinciding with a general election year, several key indicators are shaping expectations.

India’s economy, showing resilience, posted a 7.8% growth in the first quarter, prompting upward revisions by Deloitte India and the IMF, estimating growth at 6.5-6.8% and 6.3%, respectively, for FY24. Capital expenditure on infrastructure is set to rise from 22% in FY23 to 38.9% in FY24, reflecting the government’s commitment to development.

Encouraging signs also emerge in the MSME sector, with loan demand surging by 33% in Q1 FY23-24, indicating recovery post-pandemic. Deloitte’s report highlights potential downsides, citing inflationary pressures, especially in food and oil prices.

Economist Rumki Majumdar from Deloitte India expresses optimism, projecting India’s growth between 6.5-6.8% for FY2023-24. With inflation concerns, she emphasizes the need for stable growth.

Looking ahead, the government is expected to redirect savings from subsidies to bolster rural incomes. Deloitte recommends widening the scope of Production-Linked Incentive (PLI) schemes to sectors like chemicals, encouraging manufacturing. Additionally, supporting export initiatives like Remission of Duties and Taxes on Exported Products (RoDTEP) could further stimulate economic growth.

As the nation awaits the interim Budget, attention is on policies addressing energy, climate change, sustainable development, and geopolitical concerns, with a keen eye on driving domestic demand for sustained economic growth.