India’s long-term economic outlook stays positive, supported by demographics and geopolitical factors. The Union Budget 2024 has prompted mixed reactions from economists, with some highlighting its long-term vision and others expressing concerns about its immediate impacts. While the focus on sustainable growth and fiscal consolidation receives positive marks, concerns linger about the stock market and inflation.
Indranil Pan, Chief Economist at YES BANK, applauds the budget’s alignment with the Economic Survey’s emphasis on sustainable growth. “The budget aligns well with the Economic Survey’s focus on long-term stability,” says Pan. Measures to equip the workforce with in-demand skills and foster entrepreneurship through abolishing the angel tax resonate with this vision.
Achala Jethmalani of RBL Bank praises the government’s focus on creating quality jobs, not just increasing numbers. Initiatives like credit facilitation and increased loan limits for MSMEs aim to empower this crucial sector, the backbone of the Indian economy. “The focus on quality jobs alongside quantity is commendable,” Jethmalani states.
Dr. Rumki Majumdar of Deloitte India highlights the budget’s focus on land reforms, a long-standing challenge hindering agricultural productivity. “Land reforms have been a bottleneck for agricultural productivity for years,” says Majumdar. Initiatives like digital land records and improved access to credit are seen as positive steps towards a more efficient and equitable agricultural system.
A major point of agreement is the government’s focus on fiscal consolidation. Both Pan and Jethmalani see the lower fiscal deficit and reduced borrowing program as positive signals. “This approach could lead to softer bond yields and potentially an upgrade in India’s sovereign rating, attracting further investment,” Jethmalani believes.
However, the budget isn’t without its critics. The increased capital gains tax has raised concerns about a potential dampening effect on the stock market. “This highlights the delicate balancing act between short-term market fluctuations and long-term economic stability,” cautions Pan.
While the economists’ reactions paint a generally positive picture, some crucial aspects remain unaddressed. The budget’s impact on inflation and the specific benefits for income taxpayers require analysis.
As the year unfolds, it will be crucial to monitor the effectiveness of these initiatives and their impact on the nation’s growth trajectory.