Union Budget 2024-25 broadly a continuation of the interim Budget with some improved fiscal space as well as shift towards jobs. At the macro level, compared to interim Budget, the fiscal numbers are an improvement.

Despite retaining a same nominal GDP growth target of 10.5 per cent, fiscal deficit target is brought down to 4.9 per cent and the revenue deficit target is also brought down to 1.8 per cent.

The Budget continues to focus on enhancing capital expenditure, retains the interim budget allocations, although with higher RBI dividend, one would have expected larger allocation for states within their capital expenditure allocation.

This is when states have larger appetite for taking up more infrastructure projects than the Centre. In some sense, despite larger external headwinds and also with less support from the private sector, the Centre continues to ensure the recovery process.

On the public debt target, in her speech, the Finance Minister suggest that going forward, from 2026- 27, fiscal deficit target may be fixed in such a way it will bring down the public debt (not mentioned, but could be to 40 per cent in the case of Centre as per revised FRBM act). But this needs more calibration between fiscal deficit, debt as well as GDP growth targets and hope 16th Finance Commission will undertake this exercise.

One of the major concerns about the economy in the recent period, which the Economic Survey also highlighted, is about the jobs creation.

While various policies, such as PLI, have incentivised domestic industry to cope from ‘back-to-back black swan events’, factor incomes data suggest skewed growth of profits and wages going against the jobs.

This Budget has rightly brought back the focus on jobs through ELI (under three schemes) as well as through skilling and internship schemes. Alternative could have been integrating both PLI and ELI schemes so that manufacturing sector could have improved both output and employment shares in the economy.

The Budget tried to ensure a fine balance by increasing both short and long term capital gains tax as well as bringing in Securities Transaction Tax without affecting the market participation as well as their risks. This should provide some liquidity in the banking sector.

The Budget also suggest a continuation of various central sector schemes such MGNREGS, PMAY (both Rural and Urban), PMGSY, Jal Jeevan Mission, etc., and has increased allocations to all these schemes.

While the Budget talked about saturation approach, it continued to increase allocations to PMKISAN and PMGKAY. On the positive side, the Budget suggest a decline in subsidies, from 1.4 per cent to 1.2 per cent of GDP, which suggest efficiency in subsidy disposal.

On the revenue side, similar to last two years, the Budget appear to be conservative. With improved buoyancy and increased tax base, the actual numbers could be little higher. Disinvestments proceeds (miscellaneous capital receipts), which has been a concern, budgeted at ₹50000 crore.

On the reforms side, the Budget speech highlights two areas: productivity and efficiency. While we look for more details on this, in order to improve factor and product markets outcomes, these two areas must be the focus and glad that Budget focusses on this.

Overall, the Budget ticks almost all the boxes in its way to ensure continuity and stability in the economy, both in the short and medium term. With these policies, despite global headwinds, Indian economy should continue to achieve 7 plus per cent growth, but with more formal jobs.