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The Hindu Editorial


1. Interim Budget 2024 — in campaign mode.

Topic: GS3 – Indian Economy – Government Budgeting. UPSC candidates need to understand the Interim Budget analysis for 2024-25, assessing fiscal management, welfare schemes, and political implications for comprehensive exam preparation.
  • The article analyzes India’s Interim Budget for 2024-25, examining discrepancies in spending on key schemes, fiscal performance, and the political implications of the government’s economic claims.
Additional information on this news: Introduction: Focus on Interim Budget for 2024-25
  • Indications prior to Finance Minister Nirmala Sitharaman’s presentation hinted at a focus on the Interim Budget for 2024-25.
  • Prime Minister Narendra Modi clarified that an interim budget is presented when polls are close, expressing confidence in a victory and promising a full budget post-election.
Interim Economic Survey: “Transformative Growth” Eulogy
  • An ‘interim Economic Survey’ highlighted post-Independence economic development, particularly during the 2014-24 decade as “transformative growth.”
  • The survey, reflecting an electioneering tone, credited the Modi government for significant progress, contrasting it with earlier periods of growth.
Budget Speech: Vocal Expression of Government’s Achievements
  • Part A of the Budget speech focused on welfare schemes, attributing them largely to Prime Minister Modi, despite his past dismissals of similar schemes implemented by non-BJP State governments.
  • Part B declared a commitment to fiscal consolidation while increasing spending on infrastructure and welfare.
Analysis of Fiscal Performance: CGA Data Insights
  • Assessing the fiscal performance for 2023-24 is challenging due to the February 1 budget presentation and revised estimates incorporating projections until March 31.
  • Controller General of Accounts (CGA) data reveals significant deviations between budgeted and revised expenditures in crucial areas.
MGNREGA Spending Discrepancy:
  • Despite claims of inadequate funding, the revised estimate for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2023-24 is lower than the budgeted amount.
  • The CGA reports a deviation between estimated and actual expenditures, with a substantial portion projected for the last quarter of the financial year.
PM-KISAN Scheme Spending Discrepancy:
  • The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme’s actual spending till December is considerably lower than the revised estimate for the entire year.
  • Similar to MGNREGA, there is a possibility of pre-election spending to influence voters in favor of the BJP.
  Interpretation of Spending Deviations:
  • Deviations between actual spending till December and revised estimates raise questions about the government’s allocation claims.
  • Possible interpretations include inflated revised estimates for political messaging or a planned pre-election spending blitz.
Food Subsidy and National Food Security Act:
  • Despite claims of expanding food support, the total food subsidy has decreased from ₹5,41,330 crore in 2020-21 to ₹2,87,194 crore (projected) in 2023-24.
Macroeconomic Level Analysis:
  • The Budget claims to almost meet receipts other than borrowing, attributing it to meeting expectations in tax and non-tax revenues.
  • Hefty increase in non-tax revenue attributed to a rise in income from dividends and profits, mainly from transfers from the Reserve Bank of India.
Fiscal Deficit Management:
  • The Finance Minister claims to marginally keep the fiscal deficit at 5.8% of GDP below the budgeted level while ensuring total expenditure in line with the budget.
Conclusion: Political and Economic Implications
  • While the government emphasizes fiscal prudence, the impact on voters and the electoral outcome remains uncertain.
  • The Budget reflects a mix of political messaging and economic management, with potential implications for the upcoming elections.
PYQ: The public expenditure management is a challenge to the government of India in the context of budget-making during the post-liberalization period. Clarify it. (UPSC CSE (M) GS-3 2019) (250 words/15m)
Practice Question:  Discuss the fiscal management, welfare scheme allocations, and potential political ramifications highlighted in the analysis of India’s Interim Budget 2024-25.

2. A case of capex under the ‘macroscope’

Topic: GS3 – Indian Economy – Government Budgeting.

Critical for UPSC: Analyzing India’s post-COVID economic recovery, fiscal policies, and record-high public capital expenditure in the FY25 Interim Budget.

  • The article discusses India’s post-COVID-19 economic recovery, emphasizing robust exports, increased domestic investments, and the FY25 Interim Budget’s record-high public capital expenditure, focusing on infrastructure and fiscal consolidation.

Additional information on this news:

India’s Economic Recovery Post-COVID-19:

  • Notable recovery marked by robust exports and domestic investments.
  • Exports benefited from global supply chain ease and a surge in services exports.
  • Domestic investments driven by the government’s focused capital expenditure (capex) push.

Improved Investment Ratio:

  • National Statistical Office estimates India’s investment ratio at 29.8% of GDP in 2023-24, a significant improvement from the 2020-21 low of 27.3%.
  • Ranks fourth best in G-20 countries for the investment ratio improvement post-COVID-19.

Record High Capex in FY25 Interim Budget:

  • FY25 Interim Budget emphasizes public capex, setting a record high at ₹11.11 trillion, comprising 4% of GDP and 23.3% of total expenditure.
  • Notable two-thirds allocated to economic services, focusing on hard infrastructure sectors like roads and railways.

PM Gati Shakti Program:

  • Introduction of PM Gati Shakti program identifies economic rail corridors to enhance logistics efficiency.
  • Focus areas include energy, mineral, and cement corridors, port connectivity corridors, and upgrading 40,000 rail bogies to Vande Bharat standards.

Record High Defence Capex:

  • Atmanirbhar Bharat campaign prioritizes defence capex, allocating ₹1.72 trillion, reaching 0.5% of GDP in FY25.
  • Launch of a new scheme for deep-tech technologies in defence to expedite self-reliance.

Loans and Advances for Capex Creation:

  • Loans and advances increase to ₹1.71 trillion in FY25, facilitating State participation in ground-level capex creation.
  • States contribute significantly to general government capex, holding a 44% share as of December 23.

Inclusive Agenda Integration:

  • Despite a focus on hard infrastructure, FY25 Budget addresses the housing sector and aims to include two crore additional houses in the next five years.
  • Emphasis on green energy ambitions, providing one crore households with 300 units of free electricity monthly through rooftop solarisation.

Challenges in PSE Capex:

  • Public sector enterprises (PSEs) experience a slowdown in capex spending, with a reduction from ₹4.88 trillion to ₹3.26 trillion in FY24.
  • Modest growth projected in PSE capex to ₹3.43 trillion in FY25, with a ratio to GDP at 1.0%, the lowest in recent history.

Fiscal Consolidation and G-Sec Borrowing:

  • High point of the budget is fiscal consolidation, with FY25 Interim Budget targeting a fiscal deficit at 5.1% of GDP, below consensus expectations.
  • Gross government security (g-sec) borrowing expected to moderate to a three-year low of ₹14.13 trillion, potentially benefiting the private sector.

Private Sector and Collateral Benefits:

  • Fiscal rectitude and conservatism in the budget may lead to better availability of lendable resources for the private sector.
  • Expected collateral benefits include potential lower rates and positive impacts on the overall economy.


  • In conclusion, India’s post-COVID recovery, emphasized by robust exports and domestic investments, coupled with the FY25 Interim Budget’s record public capital expenditure, signifies a pivotal moment for sustainable development and economic resilience.
What Is Capital Expenditure And Why It Is Important?

●     Definition: Capital expenditure (CapEx) refers to the funds a company invests in acquiring, upgrading, or maintaining physical assets such as buildings, machinery, or equipment with the expectation of long-term benefits.


  • Asset Expansion: CapEx enables businesses to expand and enhance their productive capacity, supporting growth and competitiveness.
  • Efficiency Improvement: Investment in new technologies or equipment can lead to increased efficiency and reduced operational costs over time.
  • Long-Term Value: Capital expenditures contribute to the creation of long-term value by strengthening a company’s infrastructure and capabilities.
  • Compliance and Safety: Upgrading facilities ensures compliance with regulations and enhances workplace safety standards.
  • Competitive Advantage: Regular investments in capital assets can give a company a competitive edge by staying technologically advanced and efficient.

PYQ:   Distinguish between capital budget and revenue budget. Explain the components of both these Budgets.

(150 words/10m) (UPSC CSE (M) GS-3 2021)

Practice Question:  Examine the role of India’s post-COVID economic recovery, fiscal policies, and record public capital expenditure in the FY25 Interim Budget for sustainable development. Discuss. (250 words/15m)

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