The 2024 Budget is a vote on account Budget, implying limited parliamentary discussion and hence an avoidance to tax modification at large. The primary objective is to seek permission to spend and collect receipts until the new government is formed. The underlying theme was clearly fiscal consolidation with an ability to maintain the infrastructure spends at the existing run rate.
The pace of fiscal consolidation took everyone by surprise. Despite FY24 being a pre-election year, and despite FY24 nominal GDP growth coming in lower than budgeted (10.5% y-o-y vs. 8.9%), the government plans to end the year with lower than budgeted fiscal deficit (RE at 5.8% vs. BE of 5.9% of GDP) and consolidate it to 5.1% of GDP in FY25. It lends credibility to their FY26 fiscal deficit target of 4.5%.
Nominal growth is projected at 11%, which looks slightly optimistic but overall receipts are projected to grow by a reasonable 11.8% versus RE of 12.2% for FY24.
