Analysis of the 2024 Interim Budget by Finance Minister Nirmala Sitharaman India's Fiscal Roadmap

India’s Economic Vision – Nirmala Sitharaman Interim Budget 2024:

Today, Finance Minister Nirmala Sitharaman revealed the Interim Budget 2024 in light of the upcoming Lok Sabha elections, making it her sixth consecutive budget presentation. Without bringing in popular but unsustainable measures, she decided to keep tax rates steady for both direct and indirect taxes. Sitharaman outlined a vision for the next five years, foreseeing remarkable growth and announcing a capital expenditure of Rs 11.1 lakh crore for the coming fiscal year – an 11 percent increase from the current one.

Notably, the government aims to bring down the fiscal deficit target to 5.1 percent of GDP in the next fiscal year, with a further reduction to 4.5 percent targeted for FY26. It’s essential to note that a more detailed budget will be presented once a new government is formed after the Lok Sabha Elections, given the interim nature of this budget.

Key Insights into : Direct and Indirect Tax Changes:

Nirmala Sitharaman suggests no changes in direct and indirect taxes, including import taxes.
The same tax rates for both direct and indirect taxes will stay in place.
Tax breaks for start-ups and investments by Sovereign wealth funds extended until March 31, 2025.
The focus is on improving services for taxpayers.
Tax reforms have broadened the tax base and increased tax collections.
The government will withdraw old disputed direct tax demands, benefiting 1 crore taxpayers.
Some tax benefits are proposed for pension funds.
The processing time for tax returns has significantly reduced from 93 days in FY14 to 10 days.
The GST tax base has more than doubled, according to the Finance Minister.
The number of tax filers has increased by 2.4 times, and direct tax collections have tripled since 2014.
Tax receipts for 2024-25 are estimated at Rs 26.02 lakh crore.
Direct tax collections have tripled in the last 10 years, and return filing has swelled to 2.4 times.

Key Insights into : Fiscal Announcements:

A spending plan of Rs 11.11 lakh crore is set for capital expenditure.
The capital expenditure makes up 3.4% of the GDP.
The Fiscal Deficit target for FY24 is now 5.8% of GDP, slightly revised from 5.9%.
The Fiscal Deficit target for FY25 is set at 5.1%.
The government aims to further reduce the fiscal deficit to 4.5% in 2025-26.
The Gross market borrowing target for FY25 is Rs 14.13 lakh crore.
Net market borrowing is expected to be Rs 11.75 lakh crore.
The revised expenditure for FY24 is Rs 44.90 lakh crore.
The estimated total revenue receipts for 2024/25 are Rs 30 lakh crore, up from the revised estimate of Rs 26.99 lakh crore.
Nominal GDP growth is projected to be 10.5%.
A budget of Rs 2.12 lakh crore is allocated for food subsidy.
The Divestment Target for FY24 has been reduced to Rs 30,000 crore.
The Divestment Target for FY25 is set at Rs 50,000 crore.

Key Insights into : Railway

The Railways receive a funding of Rs 2.4 lakh crore.
Three key economic railway corridors are introduced under PM Gati Shakti, aiming to enhance logistics efficiency and cut costs.
The Finance Minister unveils three economic corridors focused on energy, minerals, and cement.
Plans are outlined for improved port connectivity and high-traffic density corridors.
Urban transformation is promoted through initiatives like Metro rail and NaMo Bharat.
A total of 40,000 regular train bogies will be transformed into high-speed Vande Bharat ones.

Key Insights into : Defence:

The Defence Budget for FY 2024-25 is set at Rs 6,21,540.85 crore, constituting 13.04 percent of the total Union Budget.
The Ministry of Defence (MoD) is the primary recipient of budgetary allocations.
Compared to FY 2022-23, the Defence budget for FY 24-25 has increased by approximately one lakh crore (18.35 percent).
It is 4.72 percent higher than the allocation for FY 23-24.
The budget breakdown includes 27.67 percent for capital, 14.82 percent for operational expenses, 30.68 percent for Pay and allowances, 22.72 percent for defence pensions, and 4.11 percent for civil organisations under MoD.

Interim Budget — Tank Centurion passes through the Rajpath, at the 73rd Republic Day Celebrations, in New Delhi on January 26, 2022.

Key Insights into : Agriculture:

Encourage both private and public sector support for investments in post-harvest activities.
Focus on empowering dairy farmers.
Increase efforts to control Foot and Mouth Disease in livestock.
Expand the application of Nano-DAP (fertilizer) in all agro-climatic zones.
Provide crop insurance to 4 crore farmers through PM Fasal Bima Yojana.
Establish five integrated Aqua Parks.
Introduce Blue Economy 2.0 to boost aquaculture.
Enhance the implementation of Pradhan Mantri Matsaya Sampada Yojana to improve aquaculture productivity, double exports, and create more jobs.
Provide direct financial assistance to 11.8 crore farmers under PM-KISAN.

Key Insights into : Tourism:

States will receive interest-free loans to boost tourism.
Money will be given to support tourism development in Lakshadweep.

Key Insights into : Health Sector:

Expand healthcare benefits to Aasha workers and Aanganwadi workers under Ayushman Bharat.
The government aims to establish hospitals in every district.
Initiate vaccination for cervical cancer in girls aged 9-14.
Speed up Saksham Anganwadi and Poshan 2.0 programs to enhance nutrition delivery and early childhood care.
Allocate Rs 90,170 crore to the health sector, which is 13.8% higher than the revised estimate of Rs 79,220 crore for 2023/24.

Key Insights into : Renewable Energy:

Provide financial support to make wind energy more feasible.
Establish facilities for turning coal into gas and liquid.
Gradual requirement for mixing CNG, PNG, and compressed biogas.
Offer financial help for acquiring machinery to gather biomass.
Enable one crore households to receive up to 300 units of free electricity each month.

Key Insights into : Education:

For the education sector in 2024/25, a budget of Rs 1.25 lakh crore is anticipated, marking a 14.5% increase from the revised estimate of Rs 1.1 lakh crore in 2023/24.

Key Insights into : Houses:

Introducing a new housing initiative for the middle class.
The goal is to construct 2 crore houses through PM Aavas Yojana.
Pradhan Mantri Awas Yojana (Grameen) is on track to fulfill its target of 3 crore houses, with an extra 2 crore homes planned for the next five years.