Nirmala Sitharaman's upcoming Budget: What to expect

On July 23, Finance Minister Nirmala Sitharaman will present the Budget for the fiscal year ending March 2025. POINTS TO WATCH IN BUDGET ANNOUNCEMENT Fiscal deficit target: Despite political pressures, the government is committed to maintaining a fiscal deficit target of 5.1 per cent of the GDP. This means they aim to keep the gap between their spending and income within this limit Despite political pressures, the government is committed to maintaining a fiscal deficit target of 5.1 per cent of the GDP. This means they aim to keep the gap between their spending and income within this limit Tax cuts: Individuals may receive good news in the form of tax cuts, which could translate to more disposable income for those who earn less Individuals may receive good news in the form of tax cuts, which could translate to more disposable income for those who earn less Support for farmers: The government may increase the annual cash payment to small farmers from the current Rs 6,000 to Rs 8,000, aiming to provide better financial support The government may increase the annual cash payment to small farmers from the current Rs 6,000 to Rs 8,000, aiming to provide better financial support Pressure from allies: Relying on the TDP and JD after a less-than-majority win in recent elections, the government faces pressure to allocate more budget towards Andhra Pradesh and Bihar WHY IT MATTERS? HISTORICAL CONTEXT IN NUMBERS FY1980: India had a Budget deficit of approximately Rs 0.06 trillion, 5.17 per cent of the GDP India had a Budget deficit of approximately Rs 0.06 trillion, 5.17 per cent of the GDP FY1990: The deficit grew to around Rs 0.36 trillion, 7.22 per cent of the GDP The deficit grew to around Rs 0.36 trillion, 7.22 per cent of the GDP The 2000s: Notable spikes during the global financial crisis in 2008-09 saw the deficit soar to Rs 3.37 trillion, 6.11 per cent of the GDP in 2009 Notable spikes during the global financial crisis in 2008-09 saw the deficit soar to Rs 3.37 trillion, 6.11 per cent of the GDP in 2009 FY2021: The deficit reached an unprecedented Rs 18.18 trillion, 9.16 per cent of the GDP, due to Covid-19-related spending The deficit reached an unprecedented Rs 18.18 trillion, 9.16 per cent of the GDP, due to Covid-19-related spending FY2025: Projections estimate the deficit will be around Rs 16.85 trillion, 5.14 per cent of the GDP, suggesting a slight improvement as the government aims to stabilise finances BIG PICTURE The fiscal demands from TDP and JD reportedly amount to over half of the government's annual food subsidy budget of Rs 2.2 trillion.