India announces interim budget
India will announce its interim budget today.
Finance Minister Nirmala Sitharaman will unveil the interim budget during a joint Parliament session. This transitional mechanism enables the government to adjust spending ahead of the upcoming general elections scheduled between April and May. The interim budget will remain effective until March 31, 2024, after which government expenditures are restricted. The election winners will subsequently formulate the official 2024-2025 fiscal year budget during the summer.
The Finance Ministry projects India’s economy to grow by 7% in FY25, sustaining robust GDP growth since 2020. Despite being the fastest-growing G20 economy, industry lobbyists expressed concerns over infrastructure investment, manufacturing tax rates, raw material duties and current tax structures, urging the interim budget address these issues.
With the government ready to boost spending by 2 trillion rupees (approximately $24 million), anticipate Sitharaman to announce an increase in infrastructure spending and structural tax reforms, including the standardization of capital gains tax structures. Given India’s global trade growth slowdown in 2023 and volatile Red Sea trade, look for the budget to include protectionist measures to protect weakened manufacturing sectors, particularly chemical producers. A successful interim budget could consolidate industry lobby support for the incumbents ahead of general elections.
