The government will avoid populist announcements and continue to focus on fiscal consolidation ahead of the interim budget to be presented before the general elections. Economists have expressed this opinion.
However, economists say that amid the demand to implement the old pension scheme, there is hope of making NPS (New Pension System) attractive along with some separate tax exemption for women. Besides, there is also a possibility of giving some relief to the employed and middle class by increasing the amount of standard deduction in the election year. Finance Minister Nirmala Sitharaman will present the interim budget for 2024-25 in Parliament on February 1. This is his sixth budget.
N R Bhanumurthy, a renowned economist and currently vice-chancellor of the Bengaluru-based Dr BR Ambedkar School of Economics University, said the upcoming interim budget is unlikely to be populist, given the government’s past stance. He said, however, there are expectations that in view of the old pension scheme becoming a political issue in many states, the government may possibly make some announcement in the budget to make the pension system (NPS) attractive.
Old pension system implemented in some states
It is noteworthy that the old pension system has been implemented in some states including Punjab and Rajasthan. Other states and central employees are also demanding implementation of old pension. In view of this, the government had formed a committee in April last year under the chairmanship of Finance Secretary TV Somanathan to review and improve the National Pension System (NPS). The committee will probably submit its report at the end of this month.
Sudipto Mandal, chairman of the Center for Development of Studies, also said, past experience shows that this government has followed fiscal policies. For example, even in the election year 2019, not much populist schemes and expenditure were resorted to. So I don’t expect too many populist schemes in the upcoming budget.
PM Kisan Samman Nidhi will remain intact
However, old schemes like Kisan Samman Nidhi can be retained. Regarding relief on the tax front, he said, employed and middle class may get some relief on the income tax front. Some relief is expected to be provided by increasing the amount of standard deduction. At present there is an exemption of Rs 50,000 under standard deduction.
