FM, top economists discuss macro economic issues, upcoming budget

The country's top economists met finance minister Nirmala Sitharaman on Wednesday for consultations ahead of the upcoming annual budget, and urged the government to push manufacturing, generate jobs, and revive private sector investment and consumption growth.

At least two economists present at the meeting said broader issues like employment, exports/imports, health and private sector investment dominated the discussions with an eye on not only the upcoming budget but also medium- and long- term growth. 

Pushing growth momentum

The stakeholder meeting conducted by Sitharaman saw the minister, top finance ministry officials and eminent economists discuss ideas and suggestions that could push the growth momentum.

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There were discussions on driving manufacturing, especially in the labour-intensive sectors, Nagesh Kumar, director and chief executive of the Institute for Studies in Industrial Development (ISID), a New Delhi-based public-funded policy think tank, told reporters after the meeting on Wednesday

"We discussed measures for capacity-driven growth for the economy which should be sustainable. It was discussed that the private sector investment and consumption growth should also be pushed to sustain the growth momentum," he said.

He said there were no specific numbers discussed on the capex front.

The finance minister will also meet top industry representatives, leaders from the capital markets and financial sector, farmers associations, agricultural economists, trade unions, and representatives from MSMEs, trade and services in the coming days.

On Wednesday, while issues around fiscal consolidation were touched upon, it was the larger macroeconomic issues that were discussed in detail, said another senior economist, who attended the meeting, under the condition of anonymity.

"The finance minister and top officials of the ministry heard us out, but they didn't give any assurances," the person added.

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Senior finance ministry officials present in the meeting included finance secretary TV Somanathan, department of financial services secretary Vivek Joshi, revenue secretary Sanjay Malhotra, and the government's chief economic advisor V. Anantha Nageswaran, apart from the minister of state for finance Pankaj Chaudhary.

Prominent economists present at the meeting included Poonam Gupta, director general at NCER, Santanu Sengupta, chief India economist at Goldman Sachs, Vishal Vaibwah, chief economist at Tata Sons, T.C.A Anant, former chief statistician, Laveesh Bhandari, president and senior fellow at CSEP, and Tirthankar Patnaik, chief economist at the National Stock Exchange (NSE).

“Policies that generate employment should be the focus (during the upcoming budget),” economist Ashwani Mahajan, the National Co-Convener of Swadeshi Jagaran Manch (SJM), told reporters after the meeting.

On the capex front, the government is already doing enough, Mahajan added.

In February, Sitharaman delivered a crisp interim budget for FY25 that reiterated the government’s commitment to fiscal consolidation and infrastructure-led growth. There were only a few announcements and no changes to taxes.

In her shortest budget speech yet, Sitharaman conveyed the government’s focus on four key priority sectors—women, farmers, youth and the poor—but steered clear of populism. The allocation to welfare schemes (Central sector and Centrally sponsored schemes combined) for the next financial year was increased by just 4.7% over the revised estimates for FY24.

Overall, the budgeted increase in government spending to  ₹47.66 trillion is a mere 6.1% over the revised estimates for FY24. The overall spending on subsidies is 7% lower than the revised estimates, thanks to a 13.2% lower dole on fertilizers.

The upcoming full-year budget is expected to be presented in July.

While some tweaks to the estimates made in the interim budget are likely, given revenue buoyancy, the full budget for the current financial year may not see too many changes as fluctuations in spending requirements and receipts could also be accommodated in the revised estimates to be presented next year.