Whatever we tell foreign would-be investors, in the election season, it pays to mind the opinion of the voting masses, rather than of the classes. And GoI s interim budget reflects this awareness of dismay on the ground. As large a proportion as 56% of the population is being coddled with free food for the next five years.
In a post-Budget 2024 interaction, Finance Minister Nirmala Sitharaman dismissed assertions of a K-shaped recovery in India s post-COVID-19 economy, challenging critics who link good growth solely to rural luxury purchases. She emphasized that the government rejects the letter attribution to the economy s growth, maintaining that every sector is contributing to overall growth.
Experts predict that the Reserve Bank of India (RBI) will continue to maintain the pause on the repo rate in its upcoming monetary policy, following the recent interim budget. The repo rate has remained stable at 6.5% for almost a year, with the last rate hike occurring in February 2023. Retail inflation, though within the RBI s comfort zone, is still near the higher end of its range.
Finance Secretary TV Somanathan said better fiscal performance is the outcome of systemic reforms and hard work undertaken by various arms of the government. | Latest News India
Some might fret over the likely impact on economic growth of the capex compression. However, GoI could well argue that the private sector is likely to step up in the next fiscal. Lower borrowings due to the deficit compression could reduce borrowing costs for the private sector and help investment recovery. The government bond market has responded well to the deficit (and borrowing)-reduction plans.