Puffed-up and Poll-Ready: Nirmala Sitharaman’s First Interim Budget
No Dramatic Pre-Poll Sops as FM Sticks to Fiscal Deficit Targets; Announces New Urban Housing Scheme, More Rural Homes, Rooftop Solar Solutions:-Nirmala Sitharaman’s First Interim Budget
No Dramatic Pre-Poll Sops as FM Sticks to Fiscal Deficit Targets; Announces New Urban Housing Scheme, More Rural Homes, Rooftop Solar Solutions; Turns Focus to Eastern States
In her sixth Union Budget and maiden Interim Budget presentation, Finance Minister Nirmala Sitharaman resisted the allure of dramatic pre-poll sops, maintaining a focus on fiscal deficit targets while outlining key initiatives for the future. This marked a departure from the significant pre-election announcements made ahead of the 2019 Lok Sabha polls, relying instead on the government’s track record and a promise of “unprecedented development” in the next five years.
While maintaining that this Budget is a ‘vote on account’ without “spectacular announcements,” Sitharaman took the opportunity to depict India’s imperfect past before 2014, highlighting the serious mending required for the economy and governance. She then detailed how the NDA government, with a ‘nation-first’ approach, led the country to a virtually perfect present.
Painting a Rosy Picture
“It is now appropriate to look at where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years,” Sitharaman stated. She promised a white paper on the alleged mess inherited by the Narendra Modi-led government and the subsequent resurgence of the economy to sustainable, high growth.
New Housing Scheme
While refraining from major tax breaks, Sitharaman made immediate promises, including a scheme to assist the “deserving” urban middle class in purchasing or building homes. Additionally, plans were announced for the construction of two crore more rural houses over the next five years and the provision of 300 units of free power per month for one crore households through rooftop solar solutions. The Finance Secretary clarified that details of the new housing scheme would be finalized before funding the plan.
Apart from these feel-good promises, the Finance Minister committed to collaborating with states and stakeholders to implement “next-generation reforms” in the government’s next tenure. She outlined the plan to present a detailed roadmap for India’s vision of development by 2047 in the full Budget in July, introducing guiding principles that will shape the government’s approach.
Poll Signals
Emphasizing the commitment to transform eastern parts of India into economic growth engines, Sitharaman named Bihar, Jharkhand, West Bengal, Odisha, and Chhatisgarh for focused development. She also announced the formation of a high-powered panel to address challenges arising from “fast population growth and demographic changes,” leaving the intent of this move open to interpretation.
Labeling ‘social justice’ as an effective governance paradigm, the Minister argued that the government achieved what was once a political slogan through a “saturation approach of covering all eligible people.” She emphasized that the poor, women, youth, and farmers, identified by the Prime Minister, would receive priority in policy.
In a departure from tradition, Sitharaman’s speech did not quote philosophers or poets. Instead, she invoked the Prime Minister’s speeches and beliefs multiple times before concluding the speech, which was approximately 25% shorter than the President’s Wednesday address.
Stringent Fiscal Discipline
Contrary to expectations of breaching this year’s fiscal deficit target (5.9% of GDP), Sitharaman revised the estimate to 5.8% and committed to reaching 5.1% in 2024-25. The goal is to bring the fiscal gap to or below 4.5% of GDP in 2025-26. Capital expenditure plans for the next year saw an assured 11.1% increase to ₹11,11,111 crore, and interest-free capex loans to states were raised to ₹1.3 lakh crore. While gross and net borrowings for 2024-25 have been lowered from this year’s levels, Sitharaman hopes that lower central government borrowings will facilitate larger credit availability for the private sector, given the scale of private investments.
In a prudent return to tradition, keeping Interim Budgets low on profligacy and high on intent, Sitharaman navigated a fine line between fiscal responsibility and outlining a vision for India’s future.
