New Delhi, India

On Tuesday (July 23), facing tough questions from the opposition over job creation and inflation, Indian Finance Minister Nirmala Sitharaman will deliver the first Union Budget of Modi 3.0. 

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The pre-budget economic survey predicted growth of 6.5-7 per cent for fiscal year 2025. This suggests that India's economy is poised to grow at a rate that ranks among the highest in the Asia-Pacific region in the next two years.

By all accounts, July 30 will see the passing of the Union Budget 2024. 

According to reports, the opposition leaders have confronted the administration on four fronts: rising prices, high unemployment, stagnation in important economic areas, and agricultural hardship.

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What remains to be seen is whether the budget will be able to address those and the wish lists of businesses and people.

Broad expectations from the budget:

Job creation and manufacturing: In her seventh budget, Sitharaman is expected to incentivise 'Made in India' procurement across industries and provide tax breaks for new manufacturing setups and factories. The goal is to create jobs for millions of students entering the workforce.

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With the help of its allies, Modi's Bharatiya Janata Party (BJP) regained power after narrowly losing the general election due to widespread dissatisfaction with employment prospects.

Capital expenditure:

Building better infrastructure has been a top priority for the Modi government. The government's capital expenditure (capex) plans have increased from 9.5 lakh crore rupees in the previous fiscal year to 11.1 lakh crore rupees this time around. 

The federal government prioritizes infrastructure development and has provided incentives to the states to increase capital expenditures.

What remains to be seen is the measures to encourage private capex, which has been lagging over the last few years.

Tax relief:

Most are waiting to see if the finance minister will mention middle-class tax relief in her budget statement. The middle class has high hopes because they did not get anything in the interim budget before the election.

Among the Asia-Pacific region's economies, India is expected to rank among the top performers in growth in 2024 and 2025. The main reason for this is not exports or domestic consumption but government spending.

So, tax relief is important to drive domestic consumption and is considered one of this budget's broad themes.

Schemes for MSMEs:

Micro, small, and medium-sized businesses (MSMEs) are a key component of India's economic growth engine, and Sitharaman has hinted that she may unveil measures to support them. 

The defence, electronics, and electric vehicle (EV) industries all present opportunities for MSMEs to expand.

Fiscal discipline:

Compared to 5.8 per cent in the previous fiscal, the anticipated deficit for this year is 5.1 per cent. 

Fiscal deficit forecasts in the final budget are anticipated to be more optimistic than those in previous versions. The disparity between tax revenue and government spending is known as the fiscal deficit. 

With a surplus bumper from the Reserve Bank of India, the government has more room to fund its welfare plans, manage its finances and bring down the deficit.