India budget shifts spending priorities while keeping fiscal deficit in check
By Kripa Jayaram and Vineet Sachdev
MUMBAI, July 23 (Reuters) -India struck a balance between greater spending on jobs and rural development as well as transferring more funds to states, while narrowing the fiscal deficit, the 2024-25 budget unveiled on Tuesday showed.
The budget comes on the heels of last month's election setback in which Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) returned to power only with the help of allies.
The government expects the economy to grow at 10.5% in nominal terms, which includes inflation, in 2024-25, with inflation-adjusted real growth seen at between 6.5-7%.
It lowered its fiscal deficit target for the fiscal year to 4.9% of GDP, from the 5.1% target set in the interim budget in February and 5.6% in the previous year.
It lowered its gross borrowing target to 14.01 trillion rupees ($167.40 billion), said it still plans to spend a record 11.11 trillion rupees on longer-term infrastructure and marginally raised its revenue expenditure, which includes more near-term spending.
Overall the government's spending has risen a modest 1.2% since February to 48.2 trillion rupees.
The sharpest increase, of 12.6%, was in funds transferred to states, including to the BJP allies-ruled states of Andhra Pradesh and Bihar.
Spending on home affairs, urban development and agriculture also rose compared to estimates in the interim budget.
While the government spoke of increased focus on jobs and rural areas, spending on its flagship schemes rose only marginally due to an increase in funds for the affordable housing scheme.
Money allocated to the rural employment guarantee scheme was flat.
The government's tax collection estimates were largely unchanged, with net earnings from tax revenues at 25.8 trillion rupees.
Non-tax revenues rose significantly due to a large $25 billion surplus transfer from the central bank earlier this year.
Outside of budget allocations, the government raised the tax rate on capital gains from equity investments and also increased the levy on derivative trading.
Since their COVID-19 lows in March 2020, India's stock indexes have surged more than 200% each, which India's chief economic advisor flagged as a risk in a report released ahead of the budget.
Retail investors have also jumped into the riskiest corners of the market and now account for 41% of overall derivative trading volumes, compared with just 2% in 2018.
The government also provided some tax relief to low-income consumers, by raising the minimum income limit beyond which tax is imposed.
It also widened the income band which attracts the lowest tax rate.
($1 = 83.6900 Indian rupees)
India budget: 2024-25 snapshot https://reut.rs/4fg7WrS
Where the money will go? https://reut.rs/4cOxdYo
Where did the money come from? https://reut.rs/46jRO4E
India_major_schemes https://reut.rs/3SlBTwF
India Budget: Market capitalisation of Indian stock markets has risen sharply India Budget: Market capitalisation of Indian stock markets has risen sharply https://reut.rs/3A2alGf
Derivatives trading in India https://reut.rs/3Wzxb15
India Budget: Tax paid by various income slabs https://reut.rs/4bXbQD8
Reporting by Kripa Jayaram and Vineet Sachdev; writing by Ira Dugal; Editing by Savio D'Souza
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
