Pratinav Mishra
The Finance Minister, Ms Nirmala Sitharaman presented the Interim Budget for 2024-25 on February 1, 2024. This will provide funding for the government for a part of the financial year until the main budget is passed after the general elections.
Budget Highlights:-
1- Expenditure -: The government is estimated to spend Rs 47,65,768 crore in 2024-25, 6% higher than the revised estimate of 2023-24. Interest payments account for 25% of the total expenditure, and 40% of revenue receipts.
2- Receipts -: The receipts (other than borrowings) in 2024-25 are estimated to be Rs 30,80,274 crore, about 12% higher than the revised estimate of 2023-24. Tax revenue which forms major part of the receipts is also expected to increase by 12% over the revised estimate for 2023-24.
3- GDP -: The government has estimated a nominal GDP growth rate of 10.5% in 2024-25 (i.e., real growth plus inflation).
4- Deficits -: Revenue deficit in 2024-25 is targeted at 2% of GDP. This is lower than the revised estimate of 2.8% in 2023-24. Fiscal deficit in 2024-25 is targeted at 5.1% of GDP, lower than the revised estimate of 5.8% of GDP in 2023-24.
5- New Schemes -: Rs 70,449 crore has been allocated to the Department of Economic Affairs for New Schemes (details not available). The allocation is for capital expenditure, and accounts for 7.5% of the total capital outlay.
Main tax proposals in the Finance Bill -:
1 ) Taxrates unchanged -: Direct and indirect tax rates have remained unchanged.
2 ) Tax benefits to certain entities extended by another year -: Certain direct tax benefits to following entities have been extended until March 2025: (i) startups, (ii) sovereign wealth funds and pension funds, and (iii) some IFSC units. These benefits would have expired in March 2024
FINAL ANALYSIS OF BUDGET 2024-
Sitharaman reduced the food subsidy by 3.3 percent to 2.12 trillion rupees ($25.5bn) in 2025 from 2.05 trillion rupees ($24.6bn) in the current fiscal year. The fertiliser subsidy was also reduced while keeping up capital expenditure at 1.3 trillion rupees ($15.6bn). The “fiscal deficit was one of the most surprising things in the budget”, said Suman Bannerjee, the chief investment officer at Hedonova, a global hedge fund. “This was lower than we had expected.”
The reduced subsidy also indicates India’s “move away from agriculture towards manufacturing”, Bannerjee said.
The government had earlier announced free food supplies to India’s poorest, shielding them from potential food price rises. This budget measures could help bring the benefits of urban growth to boost the rural economy.
The finance minister also announced several initiatives to boost women’s skill-building and entrepreneurship, including the expansion of a scheme to train rural women on skills such as bulb-making and plumbing. Female participation in the rural work force has been growing, although it is largely in agriculture. This is often marked by low wages and seasonal work. Acquiring such skills could help transition women to manufacturing jobs.
The finance minister announced a household rooftop solar energy scheme that will allow 10 million households to claim 300 units of free energy a month. These households could also sell back the surplus energy they generate. She also announced an expansion in charging infrastructure for electric vehicles and viability gap funding for wind power projects. The careful spending ahead of elections may indicate the government’s confidence. It won elections in three major states just weeks ago and Prime Minister Modi also inaugurated the Ram Temple at Ayodhya on January 22 to nationwide fanfare.
