Budget Headlines

Interim Budget 2024: Prudence over populism
Finance Minister Nirmala Sitharaman today presented the Interim Budget, ahead of the Lok Sabha elections in the world's largest democracy. Being an election year, this was an Interim Budget, also known as a vote on account. The final full budget will be announced by the next government.

The interim budget comes months before Lok Sabha elections where Prime Minister Narendra Modi is seeking to retain the top chair for a third straight term.

Speaking ahead of the parliament's Budget session, Modi had vowed to present the full budget after coming back to power and said the interim budget will provide directions.

Sitharaman had earlier said there won't be 'spectacular' announcements in the interim budget but was no dearth of expectations in the most populous country where citizens keep fingers crossed for relief measures in the budget ranging from housing sops to favourable income tax rates.

While all eyes focused on the tax relief measures that the Interim Budget may announce before elections, Sitharaman didn't make any change to direct tax rates - be it for individuals or corporates.

The big conglomerates were eyeing for a slew of measures in the interim budget be it on corporate tax regime, manufacturing incentive schemes, compliances or enhancing the ease of doing business when New Delhi's pet project is Atmanirbhar Bharat or making in India for domestic and for the world.

This interim budget was another test for the Bharatiya Janata Party, as the ruling party had to juggle between giving handouts or mega sops and sticking to a fiscal consolidation roadmap while looking to drive investments particularly at a time when it is taking the Dragon, or China, head on in different aspects ranging from being a viable alternative for the world’s factory floor to faster growth dynamics.

Aiming to reach a fiscal deficit level below 4.5 per cent of the GDP by 2025-26, Sitharaman fixed the deficit for 2024-25 at 5.1%, below the revised 5.8% budgeted for 2023-24.

Sitharaman also proposed to raise the capital expenditure target by 11.1% to record Rs. 11.11 lakh crore for the next fiscal year, as the government hopes to further shore up demand and consumption in the economy that dreams to become the third largest by 2030. Capital expenditure means spending on infrastructure such as roads and railways.

Key Numbers from Interim Budget 2024

• Fiscal deficit target for FY25 set at 5.1%, FY24 revised to 5.8% from 5.9%
• Capex outlay of Rs 11.11 lakh crore
• Tax receipts for 2024-25 projected at Rs 26.02 lakh crore
• Divestment target of Rs 50,000 crore for FY25
• Railways to get Rs 2.55 lakh crore, up from previous year's high of Rs 2.4 lakh crore.
• Gross market borrowing target for FY25 pegged at Rs 14.13 lakh crore
• Nominal GDP growth seen at 10.5%
• PLI scheme gets Rs 6,200 crore
• Health sector to get Rs 90,170 crore, 13.8% higher than RE of Rs 79,220 crore for 2023/24
• Education budget for 2024/25 seen at Rs 1.25 lakh crore

The finance ministry in January economic review targeted to become a $7 trillion economy by 2030.

India also proposed in the interim Budget 2024 to collect higher direct and indirect taxes for the next fiscal year. India's gross tax revenue for fiscal 2025 is estimated to be Rs 38.31 lakh crore, up 11.45% from revised target for this fiscal year of Rs 34.37 lakh crore.

The swift growth of the economy has resulted in a substantial increase in tax revenue for the government, enabling it to achieve its objectives of narrowing the budget deficit. As Sitharaman presented her sixth budget speech on February 1, she focussed on sustaining infrastructure investments and implementing specific measures to bolster Modi's key sectors for the upcoming elections, including support for farmers, women, the underprivileged, and the youth.

Sitharaman proposed a range of measures targeted towards women empowerment. The Modi government would be increasing the target of women beneficiaries under its Lakhpati Didi Scheme to three crore women from two crore, Sitharaman said.


What happened in the Interim Budget 2019 and what's missing this time?
When the Narendra Modi government announced its previous interim budget in 2019, ahead of general elections, its big announcements included pro-farmer income support and pension schemes for workers, catering to India's middle class through tax relief. The BJP government had won the subsequent general elections with absolute majority and the full budget thereafter did stick to the announcements of the interim budget.

However this time, the big headline is that the Indian government has not proposed any change in income or corporate tax rates.

What interim Budget did do for farmers?
Finance Minister Nirmala Sitharaman, in her Budget speech said that for ensuring faster growth of the sector, the government will promote private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing and marketing and branding.

What interim Budget did for the common man?
A persisting demand of a common man is lower tax burden. While the government didn't lower tax rates in the budget, there were other Budget measures that can help the aam aadmi.

Among other measures, the government proposed to launch a "Housing for Middle Class" scheme to encourage middle-class individuals to purchase or construct their own homes. The government also proposed to withdraw outstanding direct tax demand, with limits set at up to Rs 25,000 for issues up to FY10 and up to Rs 10,000 for FY11-FY15, benefiting around 1 crore taxpayers.

What did the Budget do to push economic growth?
A key catalyst for boosting growth is the amount the government allocates for capex. In the last budget, India had raised capital investment outlay target to record Rs 10 lakh crore.

In the interim budget for fiscal 2025, the government raised the capital expenditure target by 11.1% to record Rs. 11.11 lakh crore for the next fiscal year. However, the on-year jump in capex target for the next fiscal sharply lagged that of 37% spike for this fiscal year as the government has restricted public spending to stick to fiscal consolidation, even as a big push in capex is crucial for India’s growth dreams to become the third largest economy in the world and create ample jobs.