Government Choose a Path of Fiscal Consolidation in Budget 2024, Says Deloitte India's Sudeep Kumar Sinha

The Government of India in this year’s budget has chosen a path of fiscal consolidation which is a prudent measure considering the target it has set up for itself. That has to some extent limited its ability to significantly enhance the allocation to the infrastructure sector. The budget has therefore maintained the same allocation of ₹11.1 lakh crore for capital investment in infrastructure that was announced in the Interim budget, which is an 11% increase over the previous year's budget. This allocation constitutes 3.4% of India's projected GDP for 2024-25, up from 3.3% in the previous year.

At an overall level, there are some important themes that have been emphasised in this budget. Firstly, the announcement on Phase IV of PMGSY to provide all-weather connectivity to 25,000 rural habitations is a welcome step and reemphasises the importance of rural connectivity.

Secondly, the Government has recognised the adverse impact of recent climate related disasters and has announced support for flood management and reconstruction in states such as Assam, Bihar, Sikkim, Himachal Pradesh.

Thirdly, an important theme has been a focus on industrial corridors, whether it is essential infrastructure in the Kopparthy node in the Vishakapatnam Chennai Industrial corridor and the Orvakal node in the Hyderabad-Bengaluru Industrial corridor or the proposed development of twelve industrial parks under the National Industrial Corridor Development Program.

Fourthly, Drinking Water, Sewerage and Solid waste in hundred cities have rightly been highlighted to improve urban infrastructure. Similarly, Housing for Urban Poor and GIS mapping and digitisation of urban land records will go a long way in terms of planned urban development.

Fifth, Transit-oriented development plans have been announced for fourteen large cities which are expected to be extended to other cities in the years ahead.

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Tourism has emerged as a very important thrust sector for many states in India. Its strong linkages with other sectors have significant ripple effect in terms of livelihood, and the overall local economy. It is therefore good to see the specific focus on development of the tourism economy. The budget specifically mentions the development of the Vishnupad Temple Corridor, the Mahabodhi Temple corridor, comprehensive development of Rajgir, and development of Nalanda and assistance to develop Orissa’s scenic beauty, temples, local crafts, wildlife sanctuaries, beaches etc.

The development of these themes has the potential of scaling up in other parts of the country in future and therefore would be followed with great interest. Another related announcement has been in the context of supporting Cruise Tourism through tax benefits.

One of the most important announcements has been the support to the development of the Capital city of Andhra Pradesh. The associated infrastructure development and the expected spin offs will be observed keenly. Development of greenfield cities has been rare in the recent Indian context and how the capital city comes up may provide an impetus to other similar initiatives in other states in the future. Therefore from a development perspective, new and innovative models in this initiative could offer inferences for urban development in other parts of the country.

Therefore, in conclusion, the themes and project announcements are broad based and have the potential for replication and upscaling. It would be interesting to see the actual implementation models and how fast they will be grounded. That would be the final test of this year’s budget.