Union Budget 2024

India's Interim Budget 2024-2025: A Roadmap for Inclusive Growth

In a momentous presentation in Parliament, Finance and Corporate Affairs Minister Smt Nirmala Sitharaman unveiled the Interim Union Budget for 2024-2025, outlining a visionary financial plan aimed at propelling India's economic trajectory toward unprecedented heights.

Capital Expenditure Surge

A standout feature of the budget is the substantial 11.1% increase in the capital expenditure outlay for the upcoming year, soaring to a remarkable Rs 11,11,111 crore, equivalent to 3.4% of the GDP. This boost follows a commendable tripling of capital expenditure over the past four years, fostering a significant multiplier effect on economic growth and job creation.

Robust Economic Outlook

Presenting the First Advance Estimates of National Income for FY 2023-24, Sitharaman highlighted a robust Real GDP growth projection of 7.3%. This aligns with the upward revision by the RBI, indicating a shift from 6.5% to 7%, spurred by robust growth in Q2 of FY2023-24.

India's economic resilience amid global challenges was underscored by the IMF's revised growth projection of 6.3% for FY2023-24, reflecting a global vote of confidence in India's economic prowess, especially as the global growth projection for 2023 remains unchanged at 3%.

Global Economic Standing

Projections from various international agencies, including the World Bank, IMF, OECD, and ADB, underscore India's growth trajectory, with estimates ranging between 6.1% and 6.7% for 2024-25. The IMF predicts India's ascent to become the third-largest global economy by 2027, further contributing significantly to global growth.

Revenue Buoyancy and Fiscal Measures

The Finance Minister pointed to the buoyancy in revenue collections, emphasizing the seventh instance of gross GST revenues surpassing the benchmark of ₹1.6 lakh crore, reaching ₹1.65 lakh crore in December 2023.

Looking ahead to 2024-25, total receipts, excluding borrowings, and total expenditure are estimated at ₹30.80 and ₹47.66 lakh crore, respectively, with tax receipts pegged at ₹26.02 lakh crore.

In a major announcement, the Finance Minister confirmed the continuation of the fifty-year interest-free loan scheme for capital expenditure to states, allocating a substantial total outlay of ₹1.3 lakh crore. Additionally, a ₹75,000 crore provision as a fifty-year interest-free loan aims to support the milestone-linked reforms of 'Viksit Bharat' by state governments.

Adhering to the path of fiscal consolidation, the fiscal deficit for 2024-25 is estimated to be 5.1% of GDP. Gross and net market borrowings through dated securities are projected at ₹14.13 and ₹11.75 lakh crore, respectively, both lower than the figures for 2023-24.

Foreign Direct Investment and Social Priorities

The Finance Minister celebrated the golden era of foreign direct investment (FDI) from 2014-23, amounting to USD 596 billion, twice the inflow observed during 2005-14. Emphasizing sustained foreign investment, negotiations for bilateral investment treaties are underway with foreign partners, aligning with the spirit of 'first develop India.'Highlighting Prime Minister Shri Narendra Modi's commitment to four major castes – 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth), and 'Annadata' (Farmer) – Sitharaman stressed the government's unwavering dedication to their needs, aspirations, and welfare.

Inclusive Development and 'Viksit Bharat' Vision

The Finance Minister outlined the government's humane and inclusive approach to development, departing from the earlier provision-focused model. The last decade has witnessed targeted development programs, such as 'housing for all,' 'hargharjal,' electricity, cooking gas, and financial services for all, reaching every household and individual.Working toward making India a 'Viksit Bharat' by 2047, the Finance Minister emphasized the need to enhance people's capabilities and empower them. This all-encompassing development approach, covering all castes and people at all levels, reflects the government's commitment to a holistic vision.

Economic Transformation and Empowerment

Acknowledging the profound positive transformation in the Indian economy over the last decade, Sitharaman expressed optimism as the country looks ahead. Opportunities for employment and entrepreneurship have increased, and the fruits of development are reaching the people at scale, instilling a sense of purpose and hope in the nation.The government's 'SabkakaSaath' approach over the past decade has assisted 25 crore people in escaping multi-dimensional poverty, aligning with the energy and passion of empowered individuals. PM Mudra Yojana has sanctioned 43 crore loans totaling Rs 22.5 lakh crore, with 30 crore loans specifically benefiting women entrepreneurs.

Strategic Development Initiatives

The Interim Budget unveiled a myriad of strategic development initiatives, including:

1. Prioritizing the eastern region as a driver of India's growth.

2. The PM Awas Yojana (Grameen) nearing its target of three crore houses, with an additional two crore houses planned in the next five years.

3. Rooftop solarization to enable one crore households to obtain up to 300 units of free electricity monthly.

4. Successes in schemes like Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana, benefiting farmers and promoting employment.

Empowering Youth and Infrastructure Development

The Finance Minister announced a golden era for tech-savvy youth with a corpus of Rs 1 lakh crore established through a fifty-year interest-free loan. This corpus aims to provide long-term financing or refinancing with low or nil interest rates, encouraging significant private sector contributions to research and innovation.For railways, the implementation of three major economic railway corridor programs and the conversion of forty thousand normal rail bogies to Vande Bharat standards were highlighted. In the aviation sector, the number of airports has doubled to 149, with 517 new routes carrying 1.3 crore passengers. Indian carriers have proactively ordered over 1000 new aircraft.

Committee for Demographic Challenges

Addressing demographic challenges arising from fast population growth, the Finance Minister announced the formation of a high-powered committee. This committee will comprehensively consider and recommend strategies to address challenges in alignment with the 'Viksit Bharat' goal.

Looking Back and Moving Forward

Reflecting on the journey from 2014, the Finance Minister acknowledged the responsibility undertaken by the government to mend the economy step by step. Overcoming challenges, the economy has been placed on a resolute path of sustained high growth, with a focus on 'nation-first.' A white paper will be released in the upcoming detailed budget in July, offering insights into the nation's economic status and lessons learned from past mismanagement.

Taxation Continuity and Ease of Living

No changes to taxation were proposed in the Interim Budget, maintaining the status quo for direct and indirect taxes. However, certain tax benefits for startups and extensions for specific investments were granted, aligning with the government's vision to improve ease of living and ease of doing business.

Direct Tax Withdrawals and Collections

A crucial announcement focused on improving taxpayer services is the withdrawal of outstanding direct tax demands. Outstanding direct tax demands up to Rs. 25,000 for the period up to financial year 2009-10 and up to Rs. 10,000 for financial years 2010-11 to 2014-15 will be withdrawn, benefiting approximately a crore taxpayers.The Finance Minister commended taxpayers for their support, highlighting the more than threefold increase in direct tax collections over the last decade, with return filers swelling to 2.4 times. Reduction and rationalization of tax rates, simplification of tax return filing processes, and the decrease in corporate tax rates were cited as measures contributing to the transformation of tax-payer services.

GST and Indirect Tax Facilitation

The Finance Minister celebrated the positive impact of GST in unifying India's fragmented indirect tax regime, reducing the compliance burden on trade and industry. The tax base of GST has more than doubled, and the average monthly gross GST collection has nearly doubled to Rs. 1.66 lakh crore this year. States have also benefited, achieving a buoyancy of 1.22 in SGST revenue.Indirect tax facilitation extends to customs, with significant improvements in import release times at various ports, supporting international trade and commerce.

A Vision for the Future

Concluding the budget presentation, the Finance Minister emphasized the government's commitment to a 'Viksit Bharat' by 2047, guided by right policies, true intentions, and appropriate decisions. The detailed roadmap for this pursuit will be presented in the full budget in July.In essence, the Interim Budget for 2024-2025 sets the stage for a transformative and inclusive economic growth trajectory, addressing current challenges and paving the way for a vibrant and resilient India on the global stage. The government's focus on empowerment, strategic development initiatives, and fiscal measures reflects a holistic approach toward achieving the 'Viksit Bharat' vision.