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Business News/ Budget / Budget Expectations/  Budget may cite ‘Vision 2047’ to seek long-term allocations

Budget may cite ‘Vision 2047’ to seek long-term allocations

Despite the upcoming Union Budget being interim, schemes might detail long-term investments

Union Finance Minister Nirmala Sitharaman with the Union Budget 2023-24 outside the Finance Ministry. (PTI/Manvender Vashist Lav)Premium
Union Finance Minister Nirmala Sitharaman with the Union Budget 2023-24 outside the Finance Ministry. (PTI/Manvender Vashist Lav)

The upcoming Union budget may integrate the government’s Vision 2047 plan with allocations, departing from tradition to lay out longer term economic plans, two people aware of the matter told Mint.

Typically, an interim budget sees the government seek permission from Parliament to meet its expenses in the short-term leading up to the general elections. However, this year the exercise may be supplemented by requirements for ministries to execute schemes over a longer period.

The government’s economic road map for the medium-to-long-term is likely to be visible in the 1 February-budget, said one of the people mentioned above. Both spoke on the condition of anonymity.

To be sure, finance minister Nirmala Sitharaman has played down expectations of big proposals in the budget, saying as a vote-on-account, it is unlikely to make any “spectacular announcements".

“It is a matter of truth that the 1 February, 2024 budget will be a vote-on-account because we will be in election mode," she said in December.

However, the budget could declare the government’s intentions by announcing funds and development plans for priority sectors and groups—the poor, farmers, women, youth, economy and infrastructure.

These could include allocations and long-term plans for key infrastructure, social and agricultural sectors that are key to accelerating economic growth, said the second person.

This would mean announcing indicative figures of investment over a 5-10 year period for various sectors and aligned goalposts.

A finance ministry spokesperson didn’t respond to emailed queries.

Experts believe 2024 will be a critical year for India, as it faces multiple global headwinds while maintaining economic recovery.

Sectors like agriculture, automobiles, consumer electronics and pharmaceuticals could remain in focus though the overall announcements could see only a marginal rise in government borrowing compared to FY24.

“Risks to global commodity prices, foreign inflows, export demand, global growth and geopolitical balances will remain heightened, requiring the government to put on reserve sufficient firepower to safeguard India’s economic and financial stability as the future unfolds. Given this, I expect a conservative budget to start with, focussed on areas with high multiplier effects," said Debopam Chaudhuri, chief economist at Piramal Enterprises Ltd.

“The public capex momentum will continue, albeit at a slower pace with an outlay not more than 10%, higher than the previous year. Fiscal consolidation w ll be a core theme, with the finance minister likely targeting a fiscal deficit of 5.3% in FY25, after meeting the FY24 target of 5.9%," he added.

Already for infrastructure sectors such as road, highways, ports, shipping and railways, the relevant ministries have finalized their Vision 2047 plans. The roads ministry has planned 50,000 km of access-controlled highways over the next decade at an investment of 20 trillion. The Railways is planning a signalling recast, Kavack system installation and new track additions over a 10-year period. Similarly, the shipping ministry’s Maritime Vision 2030 may also find a mention with indicative allocations.

These ministries have already proposed a 20-30% hike in their annual budgets and these would largely be accepted and included in the interim budget, said the first person.

The government wants to cut the growth in public spending going ahead but may make an exception in FY25 when more central investment will be required to meet the growing needs of infrastructure ministries which are on the brink of exhausting their entire FY24 capex allocations by February.

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Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 17 Jan 2024, 10:04 PM IST
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