The Finance Ministry is gearing up to present the full budget for FY25 between July 5 and July 15, reported Mint quoting people privy to discussions in the government. As per the report, the full budget will have very few changes to the estimates made in the interim budget but will have a strong emphasis on the strategy for steering economic growth over the next five years.
The full budget for the current financial year may not see too many changes as fluctuations in spending requirements and receipts could also be accommodated in the revised estimates to be presented next year. However, some tweaks are expected in the estimates made in the interim budget in view of the revenue buoyancy trend.
Along with this certain spending requirements like fertilizer subsidies may see revised budget allocation according to the requirement on ground. As per Mint, any shortfall that can’t be met by receipts, will be addessed through supplementary demands for grants. The same applies to any extra demand for legally guaranteed rural jobs.
RBI's dividend to the Centre was at Rs 2.11 lakh crore for FY24. The newly formed government will have to account for this more-than-expected dividend payout. In the interim budget only a little more than Rs 1 trillion as dividend was accounted. As per Mint, some of the extra receipts could be used for pre-payment of the Centre’s debt and for further improving the fiscal deficit position.
As far as Capital Expenditure is concerned, the government is likely to go as planned in the interim budget. The government had proposed ₹11.11 trillion of capital expenditure in FY25, an increase of 11.1% from the revised estimates for FY24.
Industries are also expectant of some kind of announcement on corportae tax rate, production linked incentive scheme and investment into manufacturing, financial services and trade. The ministry has to take a call on whether to extend the 15% concessional corporate tax rate for new manufacturing companies, which was available till 31 March 2024.
Meanwhile, EY Chief Policy Advisor DK Srivastava told Mint that the government has enough legroom to make improvements in both the fiscal consolidation glide path and in capital spending.
“Capital expenditure can be further enhanced and the signals given in the interim budget for fiscal consolidation can be further improved upon in view of the buoyant tax revenue and non-tax revenue collections. The full year budget could lay the framework for medium term growth. As global conditions are the way they are, domestic conditions will have to drive growth,” EY Chief Policy Advisor DK Srivastava told Mint.
S&P Global Ratings on Wednesday said that it expects broad continuity in economic reforms and fiscal policies to continue regardless of the election outcome, while acknowledging that an increasing share of government spending is now going into infrastructure.
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