Budget 2024: Modi 3.0 must lower fiscal deficit, says FICCI survey

Modi 3.0 should prioritise reducing India’s fiscal deficit target for FY25 from its current rate of 5.1 per cent in the upcoming Union Budget, says a survey of top economists by the Federation of Indian Chambers of Commerce and Industries (FICCI) that was released on Thursday.

FICCI’s Economic Outlook Survey expects the annual median GDP growth of the nation to be around 7 per cent for the fiscal year 2024-’25, or FY25. In quarterly terms, the survey estimates the median GDP growth was 6.8 per cent in the first quarter of FY25 and will be 7.2 per cent in the second quarter of the fiscal year.

The economist respondents of the survey feel the Budget should launch measures to bolster employment and also create scope to develop efficiency of the workforce, with a scheme such as an urban version of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) or the Employment-Linked Incentive Scheme.

The economists surveyed expect Budget 2024 to focus on setting up a milieu that encourages manufacturing growth through the expansion of the Production-Linked Incentive (PLI) schemes that ensure greater inclusion of labour-intensive sectors.

The survey report recommends the government should utilise the dividend it received from the Reserve Bank of India (RBI) earlier this year to boost rural economy and, overall, social sector programmes. For the fiscal year 2023-’24, or FY24, which ended on March 31, the RBI had announced a staggering dividend payout worth Rs 2.1 trillion.

The survey report predicts that the growth rate of the agriculture sector will see an improvement. While it was 1.4 per cent in FY24, it should reach 3.7 per cent in FY25. The report proposes the creation of incentives related to reform, which would encourage states to introduce agricultural reforms. The report also says there is need to establish a price forecast mechanism for non-MSP crops, develop storage facilities and implement measures against climate effect.

On taxation, the respondents feel the government will introduce revisions in tax rates in order to give an impetus to consumption and disposable income, especially in the lesser income bracket. “Further, it was suggested that enhancing limits under Section 80C and similar provisions could encourage long-term savings and investment,” said the survey report.

The survey was conducted among top economists who belong to sectors such as banking, financial services and industry.

The Union Budget 2024 will be presented in Parliament by Finance Minister Nirmala Sitharaman on July 23.