Finance minister Nirmala Sitharaman is set to present a record seventh consecutive budget on July 23 — beating the previous record of six by Morarji Desai — as she seeks a balance among the conflicting demands of fiscal consolidation, growth-oriented stimulus and greater expenditure on welfare schemes.

Desai, who was also the Prime Minister of India between 1977 and 1979, however, holds the record of presenting the most budgets — 10 in all.

Sitharaman, the finance minister since 2019, delivered six budgets in a row between 2019 and 2023, in addition to the interim budget for 2024.

The upcoming budget is expected to shed light on the government’s vision for the next five years.

Fiscal consolidation remains a priority, with the government aiming to bring the fiscal deficit down to 4.9-5.1 per cent in 2024-25, edging towards the 2025-26 target of below 4.5 per cent.

This goal is achievable because of the higher-than-estimated ₹2.1 lakh crore surplus transfer from the RBI and hopes of robust GDP growth this year.

In 2023-24, India’s GDP grew 8.2 per cent year over year. A significant portion of this growth was driven by strong domestic demand amid global geopolitical challenges.

Exports last fiscal also saw a significant uptick in growth in the last quarter.

Factors such as a normal monsoon season, declining inflation, softening interest rates, and government initiatives to boost consumption and investment are expected to support growth.

Consequently, the budget may see increased spending on flagship programmes such as MGNREGA (rural employment), PM Kisan (farmer welfare) and PMAY (affordable housing).

Additionally, capex (capital expenditure) is likely to be set at around ₹11.2-11.3 lakh crore to incentivise private investment.

Market participants will be closely monitoring government borrowing figures, which could fluctuate depending on any deviations from the interim budget’s 5.2 per cent fiscal deficit target.

The distribution of borrowings between the market and small savings schemes is another point of interest.

The budget may introduce several tax proposals including increased standard deduction limits under the new tax regime to bolster consumption growth and ease the burden on consumers facing recent price hikes.

The FM may also announce enhanced exemption under Section 80C in the old tax regime to encourage savings.

Higher tax concessions on home loan interest payments to incentivise homeownership and reintroduction of custom duties on finished products in certain sectors to address the inverted duty structure are on the agenda.

The government is expected to introduce policies promoting MSME (Micro, Small and Medium Enterprises) growth, a crucial factor for employment generation and GDP contribution.

Infrastructure development is likely to receive renewed focus, with potential changes in allocation priorities towards improved port and shipping infrastructure, green and sustainable energy projects and urban infrastructure development.

The government’s commitment to social sectors such as healthcare, education and skilling is expected to continue.

However, the record-breaking ₹2.1 lakh crore dividend from the RBI necessitates a balanced approach.

The government should consider using a portion of these additional resources to further reduce the fiscal deficit target for 2024-25 and allocate funds to social programmes.

The budget is also likely to see an expansion of productivity-linked incentive (PLI) schemes, particularly in sectors with high job creation potential such as textiles, handicrafts and leather.