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Below the Interim Budget 2024 Announcement by Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance

“The interim budget for 2024-25, demonstrated a balance between maintaining the momentum of recent initiatives and outlining a vision for future economic growth. In-spite of the upcoming elections, the budget demonstrates the government's commitment to fiscal prudence and long-term planning. At the core of the budget lies a focus on fiscal responsibility. The government has set a fiscal deficit target of 5.1% for FY25 and revised estimate for FY24 is 5.8% of GDP vs 5.9% earlier, exceeding market expectations and showcasing its dedication to sound financial management. The government has reiterated its intention to reach the Fiscal deficit target to get it below 4.5% by FY26. This commitment extends to managing debt, with gross borrowing projected to be lower than the previous year, reflecting a responsible approach to fiscal consolidation. Additionally, efforts to control revenue expenditure further demonstrate responsible fiscal management. After a significant increase in the previous years capital expenditure, the projected outlay to capital expenditure is to grow by 11% to Rs. 11 trillion (3.4% of the GDP).

Despite being an interim measure, the budget reveals a clear long-term vision across crucial areas. Inclusive development and equitable growth remain priorities, evident in initiatives like the Pradhan Mantri Awas Yojana aiming to build an additional 2 crore rural houses in the next five years. This emphasis on inclusivity extends to infrastructure, with continued investments in railways, airports, under the Gati Shakti program for improved logistics efficiency.

Clean energy also receives considerable attention in the budget. Investments in rooftop solarization programs highlight the government's push for modernization and sustainability. The rooftop solarization scheme, targeting 1 crore households with access to free electricity up to 300 units, exemplifies this dual focus on infrastructure development and environmental consciousness.

On the taxation front, there are no changes proposed in the existing income tax slabs but to retain the same tax rates for direct taxes and indirect taxes including import duties.

Overall, the interim budget exhibits continuity and stability, emphasizing fiscal prudence, infrastructure development, clean energy adoption, and inclusive growth. It lays the foundation for a future-oriented path towards economic prosperity. This careful balancing act positions India to navigate the upcoming transition while maintaining its focus on long-term goals, creating a optimistic outlook for the nation's economic trajectory. The 10 year benchmark yield softened significantly with the bond market taking the fiscal prudence shown in the budget positively.”

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