Analysis: India’s 2024 interim budget shows a changing economy
Al Jazeera
A move away from agriculture to manufacturing and an increase in demand for the Food for Work programme show changes in the economy.
India’s Finance Minister Nirmala Sitharaman’s interim budget last week marked nearly 10 years of Prime Minister Narendra Modi’s government. Sitharaman showcased the government’s achievements over the past decade, rather than shower freebies, ahead of national polls due in a couple of months. A careful analysis shows the changing patterns in the Indian economy.
Sitharaman reduced the food subsidy by 3.3 percent to 2.12 trillion rupees ($25.5bn) in 2025 from 2.05 trillion rupees ($24.6bn) in the current fiscal year. The fertiliser subsidy was also reduced while keeping up capital expenditure at 1.3 trillion rupees ($15.6bn).
Keeping such spending in check allowed her to announce that the fiscal deficit would be 5.1 percent for the year ending March 2025, lower than market expectations of about 5.3 to 5.4 percent.
The “fiscal deficit was one of the most surprising things in the budget”, said Suman Bannerjee, the chief investment officer at Hedonova, a global hedge fund. “This was lower than we had expected.”
The reduced subsidy also indicates India’s “move away from agriculture towards manufacturing”, Bannerjee said.
