'Budget Focus Will Be On Growth, Jobs'

'There is no immediate threat to the government, and they would prefer the growth agenda.'

Allocations for social sector schemes covering health, education and rural development are expected to increase in the FY25 Union Budget to be presented on July 23, with a focus on boosting rural demand and providing relief to weaker sections of society.

"The rural India needs more attention, and that may be reflected in the Budget allocations for the social sector schemes," a senior government official said, requesting anonymity.

A comfortable fiscal position after a bumper Rs 2.1 trillion dividend release by the Reserve Bank of India may also help the government increase allocations for such schemes.

In a report, rating agency ICRA said there was a possibility of raising the budgeted target for revenue expenditure compared to the Interim Budget, either to introduce a new scheme or increase the outlay for some existing schemes.

ICRA estimates the government's revenue expenditure at Rs 37 trillion to Rs 37.1 trillion, Rs 50,000 crore to Rs 60,000 crore (Rs 500 billion to Rs 600 billion) higher than the Interim Budget, representing an annual growth of 6 to 6.3 per cent.

'The additional allocation is largely likely to be under the non-interest, non-subsidy head, focused on the rural economy, given the tepid rural demand due to the spillovers of the inadequate and uneven monsoon seen in 2023,' the report said.

Within the social sector, education could receive additional funding to address pressing issues, such as the quality of education.

"The range in the individual expense on education varies from zero to around Rs 2 lakh per annum by the richer sections. This shows huge inequalities in education," said Amitabh Kundu, a social scientist.

Besides, the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS) is expected to see an increase, but in proportion to the Budget.

The allocation for the rural job guarantee scheme remained unchanged at Rs 86,000 crore (Rs 860 billion) in the FY25 Interim Budget compared to the RE of FY24.

"Focus would be more on growth and jobs. There is no immediate threat to the government, and they would prefer the growth agenda," Kundu said.

The Bharatiya Janata Party, in its election manifesto, promised to bring all senior citizens above 70 years of age under the Ayushman Bharat scheme, which may see an increase from the Rs 7,000 crore (Rs 70 billion) allocation in the Interim Budget.

The Pradhan Mantri Awas Yojana (Gramin) may also see more budget allocation to provide relief to the poor and increase rural demand.

However, several social sector schemes, such as the Swachh Bharat Mission to make India open-defecation free and the Jal Shakti Mission to ensure functional piped water connections to all rural households, have achieved or are near saturation level and, therefore, are not expected to see a significant increase in allocation.

To boost consumption, the government could take steps towards increasing direct benefit transfers.

The government is also considering increasing the allocation for PM KISAN Samman Nidhi in the Budget.

Elara Capital recently said the government was expected to enhance revenue spending through a hike in transfers to farmers under the PM Kisan and other revenue spending in the form of higher MGNREGA allocation.

In February, the central government significantly reduced allocations to 26 of the 37 major welfare schemes that cover 'core' and 'core of the core' programmes as part of its focused efforts on aggressive fiscal consolidation in FY24.

These schemes had cumulatively seen a decline of 6 per cent in the total Revised Estimates (RE) to approximately Rs 4.41 trillion in FY24 compared to the Budget Estimate (BE) of Rs 4.69 trillion.

These cuts in funding for major welfare schemes coincided with Finance Minister Nirmala Sitharaman revising the fiscal deficit estimate for FY24 to 5.8 per cent of gross domestic product, down from the 5.9 per cent initially budgeted, and setting an ambitious target of 5.1 per cent for FY25.

Among the schemes that saw a decline in the FY25 Interim Budget compared to the RE of FY24 were the crop insurance scheme (-2.7 per cent), Pradhan Mantri Annadata Aay Sanrakshan Yojna (-21 per cent), Prime Minister's Development Initiative for North East Region (-6.6 per cent), North East Special Infrastructure Development Scheme (-4.4 per cent), Guarantee Emergency Credit Line facility to eligible MSME borrowers (-27.4 per cent), and Prime Minister Employment Generation Programme (-22.2 per cent).

Feature Presentation: Aslam Hunani/Rediff.com