India is set to unveil a budget that will chart a path for sustained robust growth and fiscal prudence although the fallout from Hindenburg Research’s allegations on the Adani Group poses an overhang on the presentation. Finance Minister Nirmala Sitharaman will announce the last full-year budget before Prime Minister Narendra Modi seeks a third term in elections due in the summer of 2024. From 11 a.m. in New Delhi, she is expected to report a spending plan of more than $544 billion in the financial year starting April to boost jobs, fund social welfare and provide perks for manufacturing, according to a survey of economists.
The budget speech will likely be guided by concerns over slowing economic growth and limited fiscal space that the government said it seeks to rebuild to help counter a bleak global outlook. In an annual report card on Tuesday, the finance ministry forecast gross domestic product growth of 6.5 per cent in the fiscal year ahead, compared with the 7 per cent estimated for the current period.
That would require a balancing act for Sitharaman who’s expected to announce a further reduction in the fiscal gap to 5.9 per cent of GDP from 6.4 per cent in the year ending March while going for another year of record borrowing, economists said. India’s growth pace, even if it slows, remains the quickest among major economies. At the same time, opposition lawmakers planning to raise Adani Group’s woes and highlight the ties between the Indian billionaire and Modi may cast a shadow on the finance chief’s fifth budget presentation.
The unfolding clash between the Adani Group and Hindenburg that alleged stock manipulation and fraudulent account by the Indian conglomerate was painted by the billionaire as an attack on India. This comes at a time when Modi takes the global stage with India’s presidency of the Group of 20 nations as he pushes an ambition to turn the nation into the world’s third-largest economy before the end of the decade.
The budget will be parsed by investors for measures that will enable India to deliver world-beating growth against the backdrop of an uncertain global environment, higher prices and borrowing costs and political pressures ahead of state polls this year and the general election in 2024.
India watchers will also zoom in on capital spending and whether Sitharaman will keep the investment plan elevated for a third straight year. The government is spending nearly 20% of its budget this fiscal year on capital investment, the most in at least a decade. Whether or not taxes — on incomes, imports, capital gains — will be tweaked remains to be seen. Rural economy and social welfare may also get some attention, specifically on crop insurance, low-cost housing and rural roads, according to analysts.