Budget 2024 Key Highlights: Today, Finance Minister Nirmala Sitharaman unveiled the Interim Union Budget for the fiscal year 2024-25 in Parliament, marking her sixth budget presentation and the last one for the current government’s second term under Prime Minister Narendra Modi. The comprehensive budget prioritizes fiscal consolidation, infrastructural development, agriculture, green growth, and railways. Despite the anticipation, no alterations were made to the existing tax rates, leading to some disappointment among salaried individuals.
One of the notable aspects is the Fiscal Deficit target for FY25, set at 5.1 percent of the GDP, surpassing expectations. Simultaneously, the FY24 target was revised downward to 5.8 percent. In a strategic move, the capital expenditure (capex) target for FY25 saw an 11.1 percent surge to ₹11.1 lakh crore.
Finance Minister Sitharaman, during her budget speech, reflected on the positive transformation of the Indian economy over the last decade. She emphasized the country’s resilience and progress, especially in overcoming challenges since 2014, thanks to the government’s commitment to inclusive growth.
Sitharaman foresees the next five years as a period of unprecedented development, aligning with the vision of India becoming a developed nation by 2047. She highlighted the trinity of democracy, demography, and diversity as instrumental in fulfilling the aspirations of every Indian.
Experts echo the sentiment that the budget meets expectations, with a focus on strengthening domestic macro factors. Pradeep Gupta, Co-founder & Vice-chairman of Anand Rathi Group, sees this budget as conducive to foreign investments, anticipating positive outcomes such as a potential ratings upgrade.
Here are the key highlights of the 2024 Budget:
Income Tax
Sitharaman announced no changes in tax rates for both direct and indirect taxes, including import duties. While maintaining tax stability, she reported a significant milestone of doubling tax collections over the past decade. The average processing time for tax returns has been reduced to 10 days this year, enhancing efficiency.
Siddhesh Mehta, Research Analyst at Samco Securities, notes that this predictability benefits companies in navigating financial planning, fostering a secure and sustainable business environment.
Infrastructure Development
Building on the substantial tripling of capital expenditure in the past four years, the budget allocates 11.1 percent more funds, totaling ₹11.11 lakh crore, contributing to 3.4 percent of the GDP. This investment is anticipated to have a considerable multiplier effect on economic growth and employment.
Railways
Sitharaman outlined plans to convert 40,000 normal rail bogies to Vande Bharat coaches, focusing on enhancing safety, convenience, and passenger comfort. Additionally, major railway corridors, including port connectivity, energy, mineral, and cement corridors, are set to undergo expansion.
‘Lakhpati Didi’ Scheme
The Finance Minister introduced the ‘Lakhpati Didi’ Scheme, acknowledging the transformative impact of self-help groups (SHGs). The success of empowering rural women is evident, with 83 lakh SHGs and nine crore women participating. The scheme aims to elevate one crore women to ‘Lakhpati Didi’ status.
Electricity
A significant move toward sustainability involves enabling ten million households to obtain up to 300 units of free electricity monthly through rooftop solarisation. This initiative aligns with the Prime Minister’s commitment to ‘net zero’ by 2070, saving households ₹15,000-18,000 annually and facilitating surplus electricity sales to distribution companies.
Green Energy
To fulfill the commitment to ‘net zero,’ the budget introduces measures such as viability gap funding for offshore wind energy, setting up coal gasification and liquefaction capacity, and mandatory blending of compressed biogas in compressed natural gas for transport and piped natural gas for domestic use.
Electric Vehicles
The government pledges to bolster the electric vehicle (EV) ecosystem by supporting manufacturing and charging infrastructure. Sitharaman encourages the adoption of e-buses in public transport networks through payment security mechanisms.
Kartik Narayan, CEO at Staffing, TeamLease Services, commends the forward-thinking strategy to incentivize and expand the electric vehicle ecosystem, addressing the shortage of public charging stations.
Tourism
States are urged to comprehensively develop iconic tourist centers, with a rating system based on facility quality. Long-term interest-free loans will be provided to states for financing these developments. Projects for port connectivity, tourism infrastructure, and amenities on islands, including Lakshadweep, aim to generate employment.
Promoting Investments
The Finance Minister highlights the golden era of Foreign Direct Investment (FDI), with an inflow of $596 billion from 2014 to 2023, double that of 2005-14. Efforts continue to negotiate bilateral investment treaties, emphasizing ‘first develop India.’
Technology
Recognizing the transformative impact of new-age technologies and data, Sitharaman allocates a corpus of ₹1 lakh crore with a fifty-year interest-free loan. This corpus aims to encourage private sector research and innovation in sunrise domains. A new scheme for strengthening deep-tech technologies for defense purposes is introduced.
Manick Wadhwa, Director at SKI Capital, views the interest-free loan as an indispensable boon for the IT industry and sunrise sectors, anticipating enhanced research and innovations.
Ayushman Bharat
The Ayushman Bharat scheme expands its coverage to all Anganwadi and Asha workers. Sitharaman consolidates maternal and child healthcare schemes under one comprehensive scheme.
PM Awas Yojana
Despite COVID challenges, the implementation of PM Awas Yojana (Grameen) persists, with the center close to achieving the target of three crore houses. An additional two crore houses will be initiated in the next five years to accommodate the increasing number of families.
Veer Trivedi, Research Analyst at SAMCO Securities, recognizes the intensified focus on PMAY as a significant positive impact across various sectors, stimulating increased investments and activity in the construction sector.
MSME
The budget emphasizes training for Micro, Small, and Medium Enterprises (MSMEs) to compete globally and facilitate their growth. A focus on upskilling and re-skilling, along with the establishment of 3,000 new Industrial Training Institutes (ITIs), aligns with the broader ‘Make in India’ initiative.
Kartik Narayan, CEO, Staffing at TeamLease Services, sees this comprehensive approach as vital for enhancing the manufacturing sector’s contribution to GDP.
Agriculture and Food Processing
Efforts to enhance value addition in the agricultural sector continue, with a focus on boosting farmers’ income. Schemes like Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana contribute to reducing postharvest losses and improving productivity.
In conclusion, the fiscal deficit target for FY25 is set at 5.1 percent of GDP, with the capital expenditure at ₹11.1 lakh crore, a notable 11.1 percent increase. The total expenditure for FY25 is expected to be ₹30.80 lakh crore, and the gross market borrowing is pegged at ₹14.13 lakh crore, with net borrowing at ₹11.75 lakh crore. The gross tax receipt target for FY25 is ₹26.02 lakh crore.
This budget, characterized by stability and strategic allocations, aims to propel India towards sustained economic growth, innovation, and inclusive development.
