All eyes are on the Union Budget to be presented in Parliament on July 23, 2024 in the third term of Prime Minister Narendra Modi. Everyone hopes that with the development of the country, inflation and unemployment etc. will also come to an ease. But experts believe that the overall budget to be released for the financial year 2024-25 will not be so easy for the government. The government may have to face many challenges. Especially issues like declining personal consumption and reduced employment opportunities are a cause of concern. Experts have asked the government to focus on measures like tax cuts and boosting rural infrastructure to improve consumer spending and support long-term employment growth.
The problem increased due to the lag in private consumption
India has emerged as the fastest growing major economy in recent years. The Indian economy grew by 8.2 percent in fiscal year 2024, while private consumption, which includes spending by households and businesses across the country, grew by only 4 percent. The problem may increase due to lagging consumer spending. Because when people do not spend, businesses will not produce. Due to this, they will not make wages and other payments, due to which the government will not be able to collect taxes. In such a situation, economists suggest that in the Union Budget 2024, the government should promote tax cuts and rural infrastructure to improve consumer spending and support long-term job growth.
Decrease observed in both rural and urban consumption
According to National Accounts estimates, India’s private consumption growth of 4 per cent in FY24 was a 20-year low, excluding the pandemic years. The Household Consumption Survey estimates showed a decline in both rural and urban consumption in FY23. According to the report, a decline was seen in some select sectors such as automobile retail, food inflation rate, etc. The survey found that higher income groups are spending, while lower income groups are reducing their consumption expenditure. Apart from this, consumer spending has also been affected due to lower hiring in sectors such as IT. To improve them, experts suggest that the government should spend more on welfare schemes such as PM Awas Yojana, PM Kisan Samman Nidhi Yojana, etc. Focus on increasing employment opportunities as well.
