Article: Will Armaan be fulfilled by budget, all planning rests on GDP growth

New Delhi: At first glance, it seems that Finance Minister Nirmala Sitharaman has almost made untoward. he/she has presented such a budget, which will promote growth. With this, he/she has also promised to reduce the financial deficit.

Promised promised: After the NDA victory in the last general election, when Nirmala Sitharaman presented the budget in July 2024, he/she said, ‘In 2021, the roadmap I kept to reduce fiscal deficit (financial deficit), the country’s economy was very much due to the country’s economy. Has benefited. We want to bring it below 4.5% by next year. After the financial year 2027, we will keep this deficit so much every year, so that the government’s debt as a percentage of GDP will continue to decrease.Promise to reduce debt: There is no doubt that he/she has fulfilled this promise in the budget. For FY 2026 (April 2025-March 2026), he/she has set a target of 4.4%, which is less than 4.5%. Not only this, according to the medium term fiscal policy i.e. fiscal policy strategy statement, the debt of the government will also be reduced soon. In FY 2026, GDP is estimated to be 56.1% of government loans, while in the revised budget of FY 2025 it was 57.1% of GDP.

What will happen to estimates: So should it be assumed that this budget is good in every way? It seems like this, but it has a screw. All these estimates that have been presented in this budget are all based on the estimate of GDP of FY 2026. That is, if the GDP is less than the estimate, then the budget deficit and the estimates of government debt will also be lost. There is a need to understand that the world has changed a lot after July 2024. Therefore, even though the Finance Minister’s target was correct in FY 2025, uncertainty in FY 2026 has increased considerably.

Look at Delhi: The majority of the current government of the Center depends on the grace of allies. Nirmala Sitharaman’s previous budget was also shown, which has become more vocal this time. Therefore, Bihar was specially mentioned in this budget. There were some announcements for there because Bihar will have assembly elections this year and JDU is an important partner. Voting is to be held in Delhi on 5 February. Electoral conduct is in force here. Due to this, even though the Finance Minister could not make any special announcement for Delhi, it would not be wrong to think that the tax exemption of 1 lakh crore to the middle class and before that the announcement of the 8th Pay Commission was made. There is nothing to do with Delhi elections. It is to be noted that a large number of government employees live in Delhi and the middle class population here is also good.

Talk of worry: It is also true that this big tax exemption will have a positive effect on consumption. This will also speed up economy growth. But there is also a possibility of increase in inflation. If inflation increases, then it has a bad effect on growth. Then in the financial year 2025, investment in Capital Expenditure, or infrastructure, has also decreased, which can be seen on the growth in the coming times.

Trump Factor: This is the domestic situation. The real problem for the Finance Minister is ‘external’. Uncertainty has increased considerably due to Donald Trump becoming President in the US. he/she is affecting customs to inflation rate and dollar value. Therefore, Trump’s policies will have great impact on the global economy. Trump has also said, ‘We will do such things that people will be stunned.’

Global growth will decrease: The World Economic Outlook of IMF in January 2025 also did not reveal good signs. It has also cut an estimate of 2026 with a decrease in global growth estimate in 2025. According to the IMF, in the year 2026 this growth can be 3.3%, which is less than the average growth of the last two decades of this century.

Exports may decrease: According to the World Bank, the export of goods and services contributed about 22% of India’s GDP in 2023. If conservationism increases after the arrival of Trump and there is upheaval in global trade, it will also reduce Indian exports. Trump has already made many such statements. Recently, he/she had threatened to impose 100% import duty on BRICS, one of the founding members of India. Trump had said that if its member countries seek an alternative to the dollar, he/she will take this step.

Everything rests on growth: The government has estimated 10.1% nominal growth in FY 2026. Nominal growth also includes inflation with real. The government is also expecting a decrease in inflation in the next financial year. This means that she is expecting 6.3% growth. If the growth is less than this, then all the estimates of the Finance Minister will be lost.