Enhancement in allocation of PM-Kisan, MGNREGS a possibility to provide relief to rural economy

New Delhi: Although no large-scale measures or new programmes are expected in the interim budget, an enhancement in allocation of some existing ones like PM-Kisan and Mahatma Gandhi National Rural Employment Scheme (MGNREGS) is a possibility to provide relief to the rural economy.

A possible enhancement of PM Kisan entitlement from Rs 6,000/year/farmer to Rs 9,000 could increase the outlay towards the scheme by Rs 250-300 billion in FY25, Acuite Ratings & Research said.

Additionally, social welfare spending is likely to focus on targeted segments such as unemployed urban youth, poor women and tribal communities.

The general elections in India are set to be held between April and May to elect 543 members to the Lok Sabha and elect a new government for the next five years. The Union Budget for the full fiscal (FY25) is likely to be presented by the new government in July.

Therefore, the current government is set to present only an interim budget on the scheduled day i.e., February 1. Such a budget will have only limited relevance since it is primarily a “vote on account” for the approval of expenditures in the interim period of 3-4 months till the appointment of a new government.

"We don’t expect any major policy announcements in this budget as there are restrictions imposed by the Election Commission, particularly after the Model Code of Conduct comes into effect," the report said.

“We believe there will be two fundamental objectives in the upcoming budget. One is fiscal consolidation over the medium term, and second, providing relief to those segments of the economy and population who continue to face challenges despite the significant recovery in economic growth in FY23 and FY24," it added.

Additionally, the budget, as always, will also be a platform to highlight the economic achievements of the incumbent government in the last five years.

V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said there is a high level of uncertainty about the possible proposals in the interim budget. The Finance Minister had gone on record stating that “there won’t be any spectacular announcements” in the interim budget. So it is most likely to be a vote on account plus some possible relief in income tax for the lower income tax slabs.

Major public capex is unlikely since the FM has to achieve the fiscal deficit target of 5.9 per cent for FY24 targeted in the 2023 budget. Also, the massive public expenditure done through the budget provision last year has helped trigger growth in the Indian economy.

Therefore, the government’s priority would be to achieve fiscal discipline, he said.