NDA 3.0: Charting fiscal stability with focus on poor, women, farmers and youth

With Prime Minister Narendra Modi’s first decision in his third term being the release of a Rs 20,000 crore instalment of the PM Kisan Nidhi to 93 million farmers, all eyes are on the future macro-economic path the new government adopts.

Maintaining fiscal consolidation, boosting capital expenditure and ensuring the continuity of existing reforms, is the likely core of the new path, government officials said.

“The focus remains the same - the welfare of the poor, women, farmers, and youth”, an official said, adding the government may intensify its emphasis on capex, while keeping the fiscal deficit within expectations.

 
The interim budget for 2024-25 had set a fiscal deficit target of 5.1 per cent for the year.  "We will see if there is room to better this," said a government official.

 
Economists that Business Today Television spoke with suggest the recent additional transfer from the Reserve Bank of India, amounting to approximately 0.4 per cent of GDP, could potentially lower the fiscal deficit to 4.8-4.9 per cent for the year, aligning with the medium-term goal of paring it to 4.5 per cent by fiscal 2026.

Officials add that the 100-day agenda will be discussed by the newly appointed cabinet ministers, with some of the measures finding their way into the upcoming full budget for the year.

Furthermore, the government aims to implement social reforms conducive to labor-intensive growth, with a focus on job creation. Initiatives to streamline compliances and reform schemes like the Mahatma Gandhi National Rural Employment Guarantee Act to address alleged leakages are also on the agenda.

Additionally, the government intends to address pending legislation, including amendments to the Insolvency and Bankruptcy Code, to introduce provisions for cross-border and group insolvency. Presently, the absence of a legislative framework leaves cases involving cross-border jurisdictions and group resolutions subject to ad-hoc decisions by the National Company Law Tribunal.