How budget 2024 is responsible, sustainable and egalitarian

The FY25 budget continues the commitment to being responsible. The fiscal deficit is projected at 4.9 per cent of GDP in FY25 and seeks a large 0.9 pp correction relative to FY24 (and a 0.2 pp lower deficit even compared to the interim budget) — a decline of 1.8 pp over the last four years. This would be the largest annual reduction in deficit since 2013, excluding the post-Covid normalisation. This is despite the skew towards capital spending in the budget (the capital to current ratio increasing from 18 per cent to a projected 30 per cent), with obvious multipliers. The Finance Minister also pointed to the plan to bring down the deficit further to 4.5 per cent in FY26, and emphasised the goal to bring sovereign debt on a declining path as a percentage of GDP. A modest nominal GDP growth and tax buoyancy also suggest prudence, giving room for upside surprises, and flexibility to deal with unknowns.