Finance Ministry Concludes Pre-Budget Talks with 120 Invitees, 10 Stakeholder Groups

The Finance Ministry has wrapped up its pre-Budget consultations with over 120 invitees from various sectors, including agriculture, education, health, micro, small and medium enterprises (MSME), energy, and infrastructure, among others. The in-person discussions, which began on June 19, focused on the concerns surrounding jobs and growth for the upcoming Budget.

The first full Budget of the BJP-led National Democratic Alliance is set to be presented on July 23. Prior to the Budget, Finance Minister Nirmala Sitharaman held a meeting with finance ministers from different states and union territories to gather their suggestions for Budget 2024-25. The stakeholders presented a range of proposals, including staying on the fiscal consolidation path and extending production-linked incentive (PLI) schemes to small and medium enterprises (SMEs) and labor-intensive sectors to create jobs and boost consumption.

Industry representatives emphasized the need to take measures for job creation and provide budgetary support to encourage students and professionals to pursue GenAI courses. They also suggested enhancing PM-KISAN support to Rs 8,000 per year from the existing Rs 6,000, allocating more funds for agriculture research, and transferring all subsidies to farmers through direct benefit transfer.

Trade unions, on the other hand, demanded the restoration of the Old Pension Scheme and the scrapping of the four labor codes. They also urged the government to halt the privatization of public sector undertakings (PSUs). Industry bodies requested the finance minister to consider increasing the capital expenditure (capex) by 25 per cent from the revised estimate, which would provide space to deploy additional resources for rural areas in housing, agriculture, warehousing, and irrigation, among others.

The increased capex, they argued, would give impetus to jobs in rural areas and fuel demand. The upcoming Budget will be closely watched to see how the finance ministry decides to deploy the bumper Reserve Bank of India (RBI) dividend of Rs 2.11 trillion, which has provided the government with a fiscal cushion to manage expenditure expectations.

The government had set the FY25 fiscal deficit target at 5.1 per cent (Rs 16.85 trillion) of the gross domestic product (GDP) and revised the FY24 target to 5.8 per cent from the earlier projection of 5.9 per cent. The fiscal deficit narrowed further to 5.6 per cent in FY24.

The pre-Budget consultations were attended by the FM’s Budget team, including T V Somanathan, finance secretary; Ajay Seth, secretary, economic affairs; Tuhin K. Pandey, DIPAM secretary; Vivek Joshi, secretary, financial services; Sanjay Malhotra, revenue secretary; and V. Anantha Nageswaran, chief economic adviser, among other senior officers.

Historical Context:

The article mentions the upcoming Budget of the BJP-led National Democratic Alliance, which is set to be presented on July 23. This is the first full Budget of the current government, and it is expected to have a significant impact on the country’s economy and various sectors. The Budget is also significant because it comes at a time when the country is recovering from the COVID-19 pandemic and is facing challenges such as high inflation, unemployment, and a widening fiscal deficit.

The article also mentions the Finance Minister, Nirmala Sitharaman, who has been holding pre-Budget consultations with various stakeholders, including industry representatives, trade unions, and state finance ministers. This is a common practice in India, where the Finance Ministry engages with various stakeholders to gather their suggestions and concerns before presenting the Budget.

The article also mentions the Reserve Bank of India (RBI) dividend of Rs 2.11 trillion, which has provided the government with a fiscal cushion to manage expenditure expectations. This is a significant development, as the RBI dividend is a major source of revenue for the government.

Summary in Bullet Points:

• The Finance Ministry has concluded its pre-Budget consultations with over 120 invitees from various sectors, including agriculture, education, health, MSME, energy, and infrastructure. • The consultations focused on concerns surrounding jobs and growth for the upcoming Budget. • Industry representatives emphasized the need to take measures for job creation and provide budgetary support to encourage students and professionals to pursue GenAI courses. • Trade unions demanded the restoration of the Old Pension Scheme and the scrapping of the four labor codes. • Industry bodies requested the finance minister to consider increasing the capital expenditure (capex) by 25 per cent from the revised estimate. • The government has set the FY25 fiscal deficit target at 5.1 per cent (Rs 16.85 trillion) of the gross domestic product (GDP). • The fiscal deficit narrowed further to 5.6 per cent in FY24. • The pre-Budget consultations were attended by the FM’s Budget team, including senior officers such as T V Somanathan, finance secretary; Ajay Seth, secretary, economic affairs; and V. Anantha Nageswaran, chief economic adviser. • The upcoming Budget will be closely watched to see how the finance ministry decides to deploy the bumper RBI dividend of Rs 2.11 trillion.