The budget retains the qualities of continuity and broader reform as has been the case with the earlier budget too. This comes in as the most striking quality. Reform in personal taxation and also the proposed review of the non-financial regulatory framework are two steps that have been welcomed by a spectrum of people. The review of the regulations and the elimination of the vestiges of the past will make the ease of doing business better.
Focus on demand is a useful move by putting more money in the hands of the people. The disposable income that may accrue additionally is close to Rs.1.10 lakh Crs. This is quite a good chunk that could prop up consumption and investment.
There is a significant accent on agriculture and manufacturing as two of the pillars on which many significant proposals are based. The details are captured in a separate section.
It is heartening to see the fiscal glide path being intact with the fiscal deficit lower at 4.80% as against 4.90% earlier estimated for FY25. For FY 6 the estimated fiscal deficit is 4.40%. This augurs well as far as the state and direction of government finances is concerned.
The budget estimates the total public capex at Rs.10.18 lakh Crs for FY25 as against the Rs.11.10 lakh Crs originally provisioned in the FY25 budget. This will be a 91% achievement of the capex originally provisioned. The provision for FY26 is Rs.11.20 lakh Crs. This is roughly 10% higher compared to the FY25 attainment that has been projected. But what needs to be focussed on is that there will be a 10% higher public capex.
In terms of gross borrowing, the rise in borrowing program is in consonance with the projected GDP growth and the rate of inflation. Therefore, a rise of 5% in borrowing is eminently ignorable. And as we go down to the net borrowing it is higher by a small amount of Rs.11,000 Crs. This needs to be understood better against the background of a Rs.1 Lakh Cr direct taxes concessions offered in the budget.
The budget addresses the long-standing demand of some relief on the direct tax front. The proposed budget makes a provision of ‘nil tax’ up to Rs. 12 lakhs of income per year. This may spur both investment and consumption.
The budget announcements focus on 10 broad areas of development. The journey of development charted out is to be traversed with the help of four engines (Agriculture, MSME, Investment and Exports) and the fuel would be the reforms. The below table enlists the key announcements pertaining to the targeted engines of growth and the reforms.