Weekly News Roundup at 10:00 am on 3rd February 2024

Let’s begin with the Interim Budget that made headlines this week. During the presentation of the Interim Budget in Parliament on February 1st, Finance Minister Nirmala Sitharaman began her speech by underscoring the successes of the Modi government over the past decade. She emphasied on the government’s top priorities, including the poor, youth, women, and farmers. She also announced the construction of an additional two crore houses under the Pradhan Mantri Awas Yojana — Gramin. The FM expressed that the forthcoming wave of reforms will be executed in collaboration with state governments. However, Sitharaman did not specify the details of the proposed reforms. The minister concluded the speech with the announcement that there was no change in direct and indirect taxes or in the tax slabs.

The government’s gross tax revenue on the other hand, is projected to grow 11.46 percent to Rs 38.31 lakh crore in the next fiscal, buoyed by 11.6 percent growth in GST collections. GST collection in 2024-25 is estimated to rise to Rs 10.68 lakh crore, an increase of Rs 1.1 lakh crore or 11.6 percent. Of the total tax collections, Rs 21.99 lakh crore is estimated to come from direct taxes, and Rs 16.22 lakh crore from indirect taxes. In the current fiscal, the government estimates gross tax revenue to exceed the budget estimated by about Rs 76,000 crore. The budgeted tax revenue for the current fiscal was Rs 33.61 lakh crore, while the revised estimate pegs it at Rs 34.37 lakh crore.

Over to railways. Post the Interim Budget announcement, Railways Minister Ashwini Vaishnaw announced a groundbreaking budget allocation for the railway sector in the Interim Budget of the financial year 2024-25, presented by Finance Minister Nirmala Sitharaman. Vaishnaw disclosed that a historic total outlay of Rs 2.52 lakh crore has been assigned to Indian Railways for the upcoming financial year, signifying a substantial investment aimed at modernizing the nation’s rail infrastructure. The minister emphasized a shift in strategy over the past decade under PM Modi’s leadership, with a renewed focus on investing in the modernization of the railway sector.

Vaishnaw, who is also Communications Minister, revealed this week that the next spectrum auction will be a limited auction, one that is significantly smaller than the previous round. He asserted that the government is moving fast on it. He said, quote, “The spectrum auction will be a limited auction because already a large part of the spectrum which was required by the industry was auctioned last year, but every financial year we are trying to have one auction,” unquote. According to Vaishnaw, the government is working on a proposal where based on requirement, wherever smaller chunks were left out, those will be put to auction.

Meanwhile, Fitch Ratings on Friday said the slightly faster pace of fiscal deficit reduction does not significantly change India’s sovereign credit profile but the government’s emphasis on deficit reduction will help to stabilise the debt-to-GDP ratio over the medium term. In a post budget commentary, Fitch Ratings Director, Sovereign Ratings, Jeremy Zook said over the next five years, India’s government debt-to-GDP ratio would be broadly stable at just above 80 per cent of GDP. This is based on a continued path of gradual deficit reduction, as well as robust nominal growth of around 10.5 per cent of GDP. In the interim Budget 2024-25, the government revised lower its current year fiscal deficit to 5.8 per cent from 5.9 per cent budgeted earlier.

Moving on, Companies operating into the FMCG space expect government’s move to incentevise the rural India and schemes like ‘Lakhpati Didi’ helping women would spur recovery of demand in those regions. Industry captains also hailed the a 11 per cent rise in capital expenditure, reaching 11 lakh crore in the interim budget presented by Nirmala Sitharaman in the Pariament, saying it will add to job creation and economic stimulation. Moreover, the budget also creates opportunities for the FMCG sector to enhance infrastructure and improve distribution, facilitating a more extensive reach into the rural market. The sector is strategically poised to leverage the industry’s potential, aiming to significantly strengthen the market share in these crucial areas, said Parle Products VP Mayank Shah.

Lastly, Biotechnology industry veteran Kiran Mazumdar-Shaw this week said that the interim budget outlined a comprehensive roadmap for sustained economic growth that will enable India to achieve developed economy status by 2047. She termed it as an all-encompassing growth-focused budget, which augments inclusive economic development. Mazumdar-Shaw took to X and wrote, quote, “In the interim budget, Finance Minister Nirmala Sitharaman has outlined a comprehensive roadmap for sustained economic growth that will enable India to achieve developed economy status by 2047. Her emphasis on research and innovation, bio manufacturing, robust infrastructure development, and technology-driven digital transformation augur well for India to deliver on aspirational yet people-centric, inclusive development,” unquote.