Key Points
In terms of priorities, the interim budget has continued its focus on raising capital expenditure - the type of expenditure which creates assets (think railways, roads, housing) - at a faster pace compared to revenue expenditure (which is essentially spent on salaries, interest payments, pensions, etc)..
This strategy has been adopted since the pandemic as the government introduced supply-side reforms to support growth by building economic infrastructure..
Since FY21, capex has grown close to 30% on average per annum, compared to 11% growth in revenue expenditure.Interim budget toes the fiscal consolidation line as it continues with the strategy of supporting medium-term growth through higher capex spend..
We, too, broadly expected the interim budget to toe the fiscal consolidation line set out in earlier exercises, and continue with its strategy of supporting medium-term growth through higher capex spend..
Looking at financial health, the interim budget outlined the government's continued commitment to fiscal consolidation in reducing the fiscal deficit..
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