PM Modi interacted with a group of prominent economists and thought leaders to prepare the Union Budget 2025-26 at NITI Aayog, today, December 24, according to an official statement. The theme of the meeting was “Sustaining India’s Growth Momentum at a Time of Global Uncertainty”.
The meeting comes on the heels of government plans to continue big-ticket investments in infrastructure projects to spur growth and create more jobs in the slow-moving economy.
Finance Minister Nirmala Sitharaman is scheduled to present the budget in the Lok Sabha on February 1, 2025.
The Finance Minister was also present at the meeting attended by Niti Aayog Vice Chairman Suman Bery, Niti Aayog CEO BVR Subrahmanyam, Chief Economic Adviser Anantha Nageswaran, and prominent economists, including Surjit Bhalla and DK Joshi.
The agency has introduced various programs to help the poor including free food grains and providing houses to poor sections of rural and urban areas.
Spike inflation has eased over the past month as food inflation eased, allowing the RBI to cut the reserve ratio (CRR) for banks by 0.5 percent from 4.5 percent to 4 percent. This is the first time since March 2020 that the CRR has been cut which will inject Rs 1.16 lakh crore into the banking system and bring down market interest rates.
The budget is now expected to provide fiscal stimulus to accelerate economic growth. India has maintained its status as the world’s fastest growing major economy and the tightening of tax collection has helped ensure stability as the fiscal deficit is under control. This will strengthen the hands of the government in preparing the next budget.
India’s direct tax collection, which includes corporate tax and personal tax, rose 15.4 percent to Rs 12.1 lakh crore, from April 1 to November 10 this fiscal year, according to the latest figures released by the Central Board. of Direct Taxes (CBDT).
The Institute’s financial deficit at the end of the first seven months (April-October) of the current fiscal year reached 46.5 percent of the full-year target, official data released last month show.
This reflects the strong fiscal position of the macro economy and the government’s adherence to fiscal consolidation. The government aims to reduce the fiscal deficit to 4.9 percent of gross domestic product (GDP) this fiscal year from 5.6 percent in 2023-24.
Similarly, there has been a strong growth in GST collections due to increased economic activity.
Increased tax collection puts more money in the government coffers and keeps the fiscal deficit in check which strengthens the macroeconomic base of the economy. A low deficit means that the government has to borrow less money which leaves more money in the banking system for large companies to borrow and invest. This in turn leads to higher economic growth and job creation.
Besides, a low fiscal deficit keeps the inflation rate at a level that puts stability in the economy.
With input from agencies
