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The Interim Budget is a much-anticipated affair in India, capturing the attention of businesses and the public alike. This year, with the looming elections, Budget 2024 has transformed into an Interim Budget. However, Finance Minister Smt. Nirmala Sitharaman has not disappointed, unveiling schemes and benefits that resonate with the masses.
Charting the Course: Viksit Bharat Budget 2024
In a nod to the overarching theme of Viksit Bharat Budget 2024, Finance Minister Smt. Nirmala Sitharaman underscored India’s ongoing journey towards Atmanirbhar Bharat. The Interim Budget for 2024 places a special emphasis on the well-being and aspirations of the Gareeb (poor), Mahila (women), Yuva (youth), and Annadata (farmer) segments of society.
Delving into Direct Tax Proposals
- Consistency Retained: The Finance Minister declared the retention of the prevailing tax rates for direct and indirect taxes in FY 2024-25, encompassing import duties. Notably, individuals with an income of up to Rs.7 lakh face no tax liability under the new regime.
- Corporate Tax Dynamics: Existing domestic companies will contend with a 22% tax rate, while specific new manufacturing entities enjoy a reduced rate of 15%.
- Tax Milestones: Direct tax collections have witnessed a threefold increase over the last decade, coupled with a remarkable reduction in the average processing time for tax returns from 93 days in 2013-14 to a mere 10 days in 2023-24.
- Boosting Innovation: Start-ups and investments by sovereign wealth funds/pension funds are set to receive tax benefits. Additionally, the tax exemption for IFSC units, originally expiring on March 31, 2024, has now been extended to March 31, 2025.
Navigating Goods and Services Tax
- Surge in Collections: The Finance Minister reported a doubling of the average monthly Gross GST collections to ₹1.66 lakh crore in FY24.
- State Revenue Uplift: Tax buoyancy in state revenue has escalated from 0.72 in 2012-16 to an impressive 1.22 in the post-GST period from 2017-23.
Viksit Bharat by 2047: Shaping the Future
The Interim Budget aligns with the vision of a developed India by 2047 under the Viksit Bharat theme, focusing on comprehensive infrastructure development, digitalization, and social welfare.
Key Initiatives:
- Infrastructure Overhaul: A holistic approach to infrastructure development, covering physical, digital, and social aspects.
- Digital Public Infrastructure (DPI): Facilitating formalization and financial inclusion through DPI.
- Tax Base Expansion: Plans to broaden the tax base through GST.
- Financial Sector Reinforcement: Strengthening the financial sector to revive savings, credit, and investment.
- Global Capital Gateway: Establishing GIFT IFSC as a robust global capital and financial services gateway.
- Inflation Management: Proactive measures for inflation control.
Garib Kalyan, Desh ka Kalyan: Transforming Lives
- DBT Success: Direct Benefit Transfer (DBT) has resulted in savings of Rs. 2.7 lakh crore.
- Poverty Alleviation: 25 crore people have transcended multidimensional poverty.
- Street Vendor Support: Credit assistance has been extended to 78 lakh street vendors under PM-SVANidhi.
Empowering the Youth: Skill India Mission
- Skill Development: 1.4 crore youth have received training under the Skill India Mission.
- Entrepreneurial Drive: Fostering entrepreneurial aspirations, with 43 crore loans sanctioned under the PM Mudra Yojana.
Welfare of Farmers (Annadata)
- Financial Assistance: Direct financial aid provided to 11.8 crore farmers under PM-KISAN.
- Crop Insurance: Coverage extended to 4 crore farmers under PM Fasal Bima Yojana.
- Market Integration: Integration of 1,361 mandis under eNAM, supporting trading volume of Rs.3 lakh crore.
Nari Shakti: Empowering Women
- Economic Support: 30 crore Mudra Yojana loans disbursed to women entrepreneurs.
- Educational Gains: 28% increase in female enrolment in higher education over the past decade.
- STEM Advancement: A notable 43% of female enrolment in STEM courses.
- SHG Assistance: 1 crore women assisted by 83 lakh Self-Help Groups (SHGs) to become Lakhpati Didis.
Strategy Shift: Amrit Kaal to Kartavya Kaal
Sustainable Development Goals
- Net Zero Commitment: Pledging to achieve ‘Net Zero’ by 2070 under Amrit Kaal.
- Energy Focus: Supporting wind energy with viability gap funding.
- Green Alternatives: Embracing coal gasification, liquefaction, and phased blending of CNG, PNG, and compressed biogas.
- Biomass Procurement: Financial aid for biomass aggregation machinery.
- Solar Revolution: Rooftop solarisation for one crore households, providing up to 300 units of free electricity monthly.
- E-vehicle Push: Backing e-buses and bolstering the e-vehicle ecosystem through manufacturing and charging support.
- Bio-friendly Initiatives: Launching biomanufacturing and bio-foundry schemes for environmentally conscious alternatives.
- LPG Outreach: Releasing over 10 crore LPG connections under the PMUY scheme.
- Energy-Efficient Initiatives: Distributing 36.9 crore LED bulbs, 72.2 lakh LED tube lights, and 23.6 lakh energy-efficient fans under UJALA.
- Street Illumination: Installing 1.3 crore LED street lights under the SNLP scheme.
Infrastructure and Investment Blueprint
- Railway Corridor Programs: Implementing three major railway corridor programs under the PM Gati Shakti for enhanced logistics efficiency.
- Foreign Investment Drive: Promoting foreign investment through negotiated bilateral investment treaties.
- Aviation Landscape: Expanding existing airports and comprehensively developing new ones under the UDAN scheme.
- Urban Renaissance: Transforming urban spaces through Metro rail and NaMo Bharat projects.
A Healthy Nation: Advancements in Healthcare
- Cervical Cancer Vaccination: The government actively promotes cervical cancer vaccination for girls aged 9-14.
- Nutrition Enhancement: The Saksham Anganwadi and Poshan 2.0 programs are set for acceleration to enhance nutrition delivery and early childhood care.
- Immunization Drive: The U-WIN platform will facilitate the immunization efforts of Mission Indradhanush.
- Wider Health Coverage: Ayushman Bharat scheme’s health covers will be extended to encompass all ASHA, Angawadi workers, and helpers.
Housing for All: A Roof for Every Indian
- Pradhan Mantri Awas Yojana (Grameen): Close to achieving the target of 3 crore houses, with an additional 2 crore targeted for the next 5 years.
- Middle-Class Housing Scheme: A dedicated scheme to promote middle-class individuals to purchase or build their own houses.
Boosting Tourism: Gateway to Opportunities
- Iconic Tourist Centers: States will be encouraged to develop iconic tourist centers to attract business and foster local entrepreneurship.
- Financial Support: Long-term interest-free loans will be provided to states to spur tourism development.
- Global Showcasing: G20 meetings in 60 places showcased India’s diversity to a global audience.
- Island Development: Projects for port connectivity, tourism infrastructure, and amenities in islands, including Lakshadweep.
Agriculture and Food Processing: Nurturing Growth
- Post-Harvest Investment: The government promotes private and public investment in post-harvest activities.
- Innovative Solutions: The application of Nano-DAP will be expanded in all agro-climatic zones.
- Oilseeds Self-Reliance: The Atmanirbhar Oilseeds Abhiyaan aims to formulate a strategy for self-reliance in oilseeds.
- Dairy Development: A comprehensive program for dairy development is on the horizon.
- Aquaculture Enhancement: The Pradhan Mantri Matsaya Sampada Yojana implementation will be intensified to boost aquaculture productivity, double exports, and create more employment opportunities.
Allocations and Schemes: Interim Budget 2024 Insights
Ministry Allocations (in INR lakh crore)
- Ministry of Defence: 6.2
- Ministry of Road Transport and Highways: 2.78
- Ministry of Railways: 2.55
- Ministry of Consumer Affairs, Food & Public Distribution: 2.13
- Ministry of Home Affairs: 2.03
- Ministry of Rural Development: 1.77
- Ministry of Chemicals and Fertilisers: 1.68
- Ministry of Communications: 1.37
- Ministry of Agriculture and Farmers’ Welfare: 1.27
Major Scheme Allocations
- Mahatma Gandhi National Rural Employment Guarantee Scheme: Rs.86,000 crore
- Ayushman Bharat-PMJAY: Rs.7,500 crore
- Production Linked Incentive Scheme: Rs.6,200 crore
- Modified Programme for Development of Semiconductors and display manufacturing ecosystem: Rs.6,903 crore
- Solar Power (Grid): Rs.8,500 crore
- National Green Hydrogen Mission: Rs.600 crore
Understanding Interim vs. Full Budget
Dive into the nuances of an Interim Budget versus a Full Budget. While an Interim Budget serves as a temporary financial plan, bridging the gap until a new government takes charge, it focuses on routine expenses and ongoing programs. With major policy changes and tax reforms off the table, it ensures stability during the transition period.
Election Code & Fiscal Prudence
The Election Commission’s code of conduct imposes restrictions on significant policy shifts during an election year. The interim budget adheres to fiscal prudence, avoiding populist announcements.
Vote on Account: Sustaining Operations
Central to the interim budget is the “Vote on Account,” authorizing fund withdrawals for essential expenses like salaries and ongoing programs. This ensures the government’s smooth functioning until the new government assumes office.
Budget 2024 Expectations: Navigating Economic Waters
Finance Minister Nirmala Sitharaman anticipates a restrained budget, primarily focused on maintaining essential expenditures. However, expectations include potential changes such as:
- ESOP Taxation Relaxation: Startups could benefit from employee-friendly ESOP taxation rules, fostering employment generation.
- Home Loan Interest Limit Increase: Exploring the possibility of raising the limit for interest repayment on home loans to accommodate rising property prices.
- New Tax Regime Adjustments: Inclusion of home loan interest in the new tax regime to incentivize home buyers and enhance its acceptability.
- Health Insurance Deduction Enhancement: Increase in the limit of Sec 80D deduction for medical insurance premiums to improve coverage and acceptance of the new tax regime.
- Tax Benefits for Bengaluru: Rectifying the classification disparity for HRA exemption in Bengaluru, aligning it with other metro cities.
Indirect Tax Landscape: Anticipating Revisions
- GST Return Revisions: Expectations for the allowance of revisions in GST returns to reduce notices and improve compliance.
- e-Invoicing Expansion: Extending e-invoicing requirements to B2C transactions to curtail tax evasion and enhance compliance, despite potential challenges for smaller businesses.
Key Announcements: Taxation, Railways, Capital Expenditure, and Defence
Income Tax Overhaul
- Dual Tax Regimes: Introducing a new tax regime as default, while retaining the old regime as an option.
- Tax Relief: No taxation on income up to Rs 7.5 lakh in the new regime, combining rebate and standard deduction.
- Surcharge Adjustment: The highest surcharge rate reduced from 37% to 25% in the new regime.
- Revised Tax Slabs: A revamped income tax structure with progressive slabs ranging from 0-3 lakh (nil) to 15 lakh+ (30%).
Railways Reinforcement
- Record Allocation: The railways witness the highest-ever allocation of Rs 2.4 lakh crore.
- Vande Bharat Expansion: An ambitious plan to roll out 75 Vande Bharat trains by August 2023.
Capital Expenditure Surge
- 33% Increase: Capital expenditure experiences a substantial 33% boost, reaching Rs 10 lakh crore.
- Economic Boost: Aimed at fostering growth, job creation, and attracting private investment.
Defence Thrust
- 13% Budget Hike: The defence budget sees a 13% increase, now standing at Rs 5.94 lakh crore.
- Modernization Focus: A targeted approach towards acquiring new weapons, aircraft, and warships.
Additional Highlights
- Fiscal Deficit Goal: A commitment to bring the fiscal deficit below 4.5% by the fiscal year 2025-26.
- Sectoral Allocations: Increased funding for MSMEs, agriculture, education, healthcare, housing, and urban development.
- Business Facilitation: Measures to promote ease of doing business and encourage digital services.
- Welfare Extension: The free food grain scheme extends its reach until 2024, ensuring essential sustenance for the vulnerable.
- Read Also: The Union Budget 2023 PDF
In conclusion, the interim budget serves not only as a financial roadmap but also as a testament to the government’s commitment to steering the nation towards sustainable growth and prosperity. Stay tuned for the unveiling of the comprehensive budget, where the economic narrative of India will continue to unfold.