India Interim Budget 2024-25: Analysis

INDIA INTERIM BUDGET 2024-25: ANALYSIS

Budget has 4 components:

1. Revenue receipts = Good income (mainly taxes)

2. Capital receipts = Bad income (mainly loans)

3. Revenue expenditure = Bad spending (salaries, schemes, subsidies, interest payments, etc)

4. Capital expenditure = Good spending (mainly infrastructure)

So how should a Budget ideally be?

1. Revenue receipts (good income) must increase at the same rate as the GDP (nominal).

2. Capital receipts (bad income) must decrease - or increase as little as possible.

3. Revenue expenditure (bad spending) must decrease - or increase as little as possible.

4. Capital expenditure (good spending) must increase as much as possible.

The table shows that in this Budget:

1. Revenue receipts (good income) has increased by 11.2% - which is close to the increase in nominal GDP (10.5%).

2. Capital receipts (bad income) has decreased by 1.5%.

3. Revenue expenditure (bad spending) has increased by a modest 3.2%.

4. Capital expenditure (good spending) has increased by a high 16.9%.

Finally the most important thing: The Budget is reducing the fiscal deficit from 5.8% of GDP to 5.1%. So overall, we can say that this is a disciplined Budget . . .