About the Interim Budget
In India’s fiscal calendar, interim budgets hold a pivotal role, providing continuity between two full budget cycles. While they may not have the scale or scope of a full budget, interim budgets have substantial implications for the economy, governance, and public sentiment.
An interim budget is a temporary financial blueprint presented by the government, designed to fund essential operations until a new government is in place and a full budget can be delivered. It primarily focuses on maintaining current expenditures and ongoing programs.
The Finance Minister unveiled the “Viksit Bharat Budget 2024” on February 1st, 2024, reiterating India’s commitment to becoming an Atmanirbhar Bharat (self-reliant India). The 2024 interim budget focuses on uplifting key socio-economic segments, particularly the Gareeb (poor), Mahila (women), Yuva (youth), and Annadata (farmers).
A thorough analysis of the Indian Budget 2024 requires a review of taxation changes, sector-specific allocations, government spending priorities, and the broader economic context.
Policy Implications
Fiscal Policy Priorities
The budget is expected to reflect the government’s key fiscal policy goals, including efforts to boost economic growth, reduce unemployment, improve infrastructure, and enhance social welfare programs. Depending on the government’s strategy, the budget may focus on either fiscal stimulus or fiscal consolidation.
The Interim Budget 2024-25 emphasizes discretionary spending as part of the government’s fiscal policy. India is advancing in managing its debt and improving fiscal administration. The fiscal deficit target for 2024-25 is set at 5.1% of GDP, while the revenue deficit is targeted at 2%.
Taxation Changes
- Direct Tax Proposals:
- Individuals with a total income up to ₹7 lakh will be exempt under the new tax regime (Section 115BAC).
- Outstanding direct tax disputes up to ₹25,000 will be withdrawn.
- Tax benefits for start-ups and investments by sovereign and pension funds are extended to March 31, 2025. Specific units in the International Financial Services Centre (IFSC) are also exempted until March 31, 2025.
- Goods and Services Tax (GST) Proposals:
- No changes in customs duties or import rates for FY 2024-25.
- Monthly GST collections have surged, averaging ₹1.66 lakh crore in FY 2024.
Sector-Specific Allocations
The budget’s allocation to key sectors such as healthcare, education, agriculture, and infrastructure will influence market reactions and sector-specific stock performance. Investments in these areas, perceived as growth drivers, may see favorable market outcomes.
- Health: The government will encourage cervical cancer vaccinations for girls aged 9 to 14. A new platform, U-WIN, will oversee immunisation management nationwide. Healthcare under Ayushman Bharat will expand to include Accredited Social Health Activists (ASHA), Anganwadi workers, and helpers.
- Housing: The Pradhan Mantri Awas Yojana-Grameen will construct two crore additional houses over the next five years. A new initiative will help the middle class, particularly those in rented homes, slums, and unauthorized colonies, purchase or build their own homes.
- Agriculture: The budget encourages public and private investment in post-harvest activities, including storage, supply chain management, and marketing. The use of Nano DAP fertilizer will be extended across all agro-climatic zones. A program to assist dairy farmers will also be launched.
The PM Matsya Sampada Yojana will be expanded to:
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- Increase aquaculture productivity from 3 to 5 tonnes per hectare.
- Double seafood exports to ₹1 lakh crore.
- Create 55 lakh jobs.
Market Reactions
The Bank Nifty Index closed 0.42% higher at 46,188.65, with PSU banks and automotive stocks outperforming other indices. However, realty and metal stocks declined. The budget’s focus on inclusive and decentralized economic growth signals India’s ambition to be a developed nation by 2047.
Economic Growth and Social Focus
The government is committed to making India a developed nation by 2047, with four key pillars driving growth:
- Garib (Poor)
- Mahila (Women)
- Yuva (Youth)
- Annadata (Farmers)
The Finance Minister emphasized the following:
- Plans to expand the tax base through GST reforms.
- Strengthening the financial sector to promote savings, credit, and investment, thereby boosting income and financial stability.
- A focus on proactive inflation management, allowing market forces to self-correct effectively.
Initiatives for Social Welfare
Garib Kalyan (Welfare of the Poor)
- 25 crore Indians have risen out of poverty.
- 78 lakh street vendors have received credit assistance under the PM-SVANidhi scheme.
Empowering Youth
- Through the Skill India Mission, 1.4 crore youth have received training.
- 43 crore loans have been sanctioned under PM Mudra Yojana, fostering entrepreneurship among youth.
Annadata (Farmers)
- 11.8 crore farmers have received direct financial assistance through PM-KISAN.
- Crop insurance has been provided to 4 crore farmers under the PM Fasal Bima Yojana.
Nari Shakti (Women’s Empowerment)
- 30 crore Mudra loans have been disbursed to women entrepreneurs.
- Female enrolment in higher education has increased by 28% over the past decade.
In conclusion, the Indian Budget 2024 focuses on inclusive growth, fiscal consolidation, and development across socio-economic sectors. These measures are aimed at fostering economic stability and positioning India among the ranks of developed nations by 2047.