Balancing The Budget

The government may choose to maintain fiscal conservatism in the Interim Budget to be presented on February 1 but there is expectation that it will contain a few popular announcements ahead of the General Elections. How will the government maintain this balance?

-  SURABHI

AS THE MONTH of February draws closer, there is always anticipation about what the Union Budget will bring. Despite this being an Interim Budget, the anticipation is higher this year as voters are hoping that a few goodies will be announced ahead of the General Elections. It is widely expected that Union Finance Minister Nirmala Sitharaman will maintain fiscal discipline, but she is also expected to announce a few dispensations.

A full Budget will be presented later in the year after the new government is sworn in. The Interim Budget is expected to be a Vote on Account for the first few months of FY25 to ensure smooth expenditure and provide a preliminary outlook of the new fiscal. This will include an outline of the expected growth in revenue as well as expenditure for FY24 (Revised Estimate) and FY25 (Budget Estimate), which would also serve as a report card on the economy and the expectation going forward. “The Interim Budget, also called a Vote on Account, enables undertaking of expenditures at the beginning of the next fiscal until the main Budget is presented. It is not used for the initiation of any major policy changes,” D.K. Srivastava, Chief Policy Advisor at consultancy EY India, wrote in a recent report. “One key variable of interest would be the achieved improvement in indicators of fiscal imbalance, such as fiscal and revenue deficits and government debt relative to GDP after their sharp departures in the Covid-19-affected year of FY21.”

FISCAL DISCIPLINE