10th July, 2014 is the day Finance Minister Arun Jaitley will present maiden budget of Modi government. Emphatic election win on the backdrop of massive campaign which promised moon to the citizens means the hopes from new government is very high. Budget, undoubtedly, will be the first big policy statement of this new dispensation. While all sectors & people want something from this budget, can Finance Minister really walk the talk, or will he be held back by various constraints. A couple of days before we get glued to our TV sets, computers & mobiles for few hours, here we will take a look at some important numbers & how these numbers will affect the budget.
Fiscal Deficit: 4.1%
Fiscal deficit is the single biggest number most economists used to look out for in last few budgets. The story likely to be the same this time too. Interim budget presented by outgoing govt. earlier this year, had projected the fiscal deficit for F.Y. 2014-15 at 4.1% of GDP. Though many are expecting the new number to be higher than this, FM himself has said that containing fiscal deficit will be his top priority. Whatever red line he draws, it will have effect on subsidies, capital expenditure, tax rebates & almost everything in budget.
GDP Growth Rate: 4.7%
The barometer of economic growth, GDP growth rate, has been below 5% for two years in a row. In a country, where nearly 1.2 crore youngsters enter workforce every year, having low growth rate is a sin, not just economic, but also political & social. Unless measures to improve this is taken in budget, we may have another lost year. Hopefully, this indicator will be on top of the mind of Finance Minister.
Inflation: 6.01%
The biggest poll plank for BJP during electioneering was the rising prices. Though Govt. has sent some confused signals on this front in its first month, but as mentioned earlier, Budget is the first big policy statement. Main causalities of high inflation is high interest rates & its heavier effect on poor than rich. Considering the political importance of this issue, Finance Minister is very much certain to touch upon it.
Current Account Deficit: 1.7%
This was perhaps one of the last achievements of UPA Govt. While C.A.D. reduced dramatically from 4.7% in 2012-13 to 1.7% in 2013-14, vigil is must on this front, keeping in mind the situation in Iraq, Ukraine, & its repercussions.
Big 3 subsidies: Rs. 2,88,000 crore
Food subsidy (Rs. 1,25,000 crore), Petroleum (Rs. 97,000 crore) & Fertilizer (Rs. 66,000 crore) are big three subsidy burdens, which cost govt. Rs. 2,88,000 crores in last financial year. Considering low increase in MSP of crops, reducing fertilizer subsidy will be very difficult. On the other hand, govt. has continued with monthly diesel price increase, while fate of Food Security program is still unclear. Budget will spell out Govt's policy on subsidies not just for current financial year, but also for next 5 years.
Sensex: Around 26,000
Though highly volatile & many-a-times misleading, but stock market indices are one of the most advanced indicators of health of economy. Indian stock markets had risen considerably in anticipation of & following Modi's victory, but future trend will depend on the budget.
With all these & many more numbers on his mind, India's lawyer-turned-politician Finance Minister may be busy in giving final touches to his maiden budget, while the countrymen & stakeholders abroad wait anxiously for the Finance (No. 2) Bill, 2014.
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