Budget 2024: The interim budget includes measures aimed at advancing the agricultural economy and increasing demand for consumption

Budget 2024: The interim budget includes measures aimed at advancing the agricultural economy and increasing demand for consumption

Budget 2024: The interim budget includes measures aimed at advancing the agricultural economy and increasing demand for consumption

In her sixth straight budget address, Finance Minister Nirmala Sitharaman is anticipated to increase efforts to boost consumption and the rural economy while controlling inflation on February 1.

On February 1, Finance Minister Nirmala Sitharaman will likely unveil her sixth straight budget, which will likely see an acceleration of measures to contain inflation while boosting spending and the rural economy.

Experts said that increasing the amount of money in people's hands is one approach to increase consumption. This may be achieved by lowering the tax burden via adjustments to tax slabs or raising the standard deduction.

An further idea concerns funding for the MNREGA (rural employment guarantee system) and larger farmer payments.

Experts predicted that Sitharaman's attempt to increase consumption in front of the general elections will include more relaxations for women and underprivileged populations. New tax ideas or new programs are often not included in the interim budget that is submitted to the Lok Sabha before to the general elections.

The administration will ask Parliament for approval in the interim budget to cover its costs for the first four months of the 2024–25 fiscal year. Proposals to deal with urgent economic issues that can't wait until four months after the new administration is formed to deliver the whole budget may fall under this category.

Experts say that problems with the economy's weak demand for spending must be addressed immediately. According to Deloitte India partner Rajat Wahi, consumer goods businesses have increased prices in the recent eight to ten quarters mostly because of rising input costs in the case of FMCG and most everyday items.

Lower incomes are so impacted by the global supply chain effect, increased input costs, inflationary effect, and rising interest rates. Not only are rural regions affected; impoverished metropolitan communities are also considering similar challenges, according to Wahi. According to Wahi, because there are a lot more loan defaults than there used to be, the poorer segments of society are most affected by price increases.

"The rise of agriculture has not been what the administration had predicted. The goal was to treble agricultural revenue, however Wahi said that inflation had prevented this from happening yet. As to preliminary projections of GDP, farm sector growth is predicted to fall from 4 per cent in the current financial year to 1.8 per cent in 2022-23.

The primary goal of vote-on-account, according to India Ratings and Research chief economist Devendra Kumar Pant, is to give the government permission to spend money on debt servicing, interest payments, salaries, and wages for the first four months of the next fiscal year. Can we, however, wait four to five months to take any action if a certain segment of society is under stress? The problem may become worse in five months if we do nothing. In the interim budget, there could be some assistance for some of the weaker sectors, according to Pant.

Consumer durables output fell to 0.6% from 5.3% during the same time previous year, according to statistics from the Index of Industrial output (IIP) for the months of April through November. Nonetheless, over the eight months leading up to 2023, the production of consumer non-durable items rose by 5.6%; this was a positive development, given that output fell by 2.2% during the April–November 2022 period.

Making changes to the new tax system to make it more appealing and put more money in the hands of taxpayers is one method to increase consumer demand. According to Sanjay Kumar, a partner at Deloitte India, "The Budget should always take changes in tax slabs into account. There could be pressure on the government to include a house loan interest deduction into the new tax system.

In any case, the government wants more individuals to switch to the new tax system, which has lower rates than the previous one but fewer exemptions. Under the previous tax system, a taxpayer could claim many deductions for specific costs like as a house loan, their children's schooling, etc. Could. , PPF contribution, and insurance premium. In addition to funding MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), funding for the PM Vishwakarma Yojana and other government skill development initiatives is probably going to be included in the interim budget.