Nirmala Sitharaman To Unveil Modi 3.0 Economic Roadmap In Upcoming Budget

Finance Minister Nirmala Sitharaman is likely to unveil the economic plan for Modi 3.0 government in the upcoming annual budget next month, after being retained. Sitharaman's prime focus will be on boosting growth, while keeping inflation in check and finding funds to fulfill the coalition government's obligations.

The economic plan will involve implementing measures to fast-track reforms in order to elevate India to a $5 trillion economy soon and transform the nation into a 'Viksit Bharat' by 2047. Recently, the RBI forecasted 7.2% growth for the current fiscal, driven by rising rural demand and easing inflation.

The new government inherits a strong economy with fiscal prudence in place. Adding to this, the RBI's announcement of the highest-ever dividend of Rs 2.11 lakh crore for FY24 serves as a significant boost.

The key policy priorities for the Modi 3.0 government would include dealing with stress in the agriculture sector, job creation, sustaining capex momentum and pushing revenue growth to stay on the fiscal consolidation path.

Rating agency S&P has already given a thumbs up to economic policies followed by the Modi regime in the past 10 years, by upgrading the sovereign rating outlook to 'Positive'. It also hinted at a possible rating upgrade in next 1-2 years, provided the government sticks to its fiscal deficit roadmap.

While tax revenue seem to be bouyant, non-tax revenue remains a challenge as strategic disinvestment has almost been a non-starter, with no big-ticket strategic sale, except Air India.

Strategic sale of a host of CPSEs (central public sector enterprises), including Shipping Corp., NMDC Steel Ltd., BEML, PDIL and HLL Lifecare, are in the pipeline. IDBI Bank Ltd. is also stuck in security and fit-and-proper clearances of bidders.

Banking sector reforms is another area where the government is facing a lot of resistance. It has not been able to carry forward the policy of privatising a few public sector banks as well as insurance companies.

On the tax revenue side, while monthly GST mop-ups have been comfortable, the GST Council, chaired by the Union Finance Minister and comprising state counterparts, will have to bite the bullet with tax rate and slab rationalisation to usher in GST 2.0.

Sitharaman was given the charge of the finance portfolio in the second stint of the Modi government after the 2019 general elections, becoming the first full-time woman Finance Minister in independent India.

(With text inputs from PTI)