Displaying the mantra of ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas,’ the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presented the Interim Union Budget for the fiscal year 2024-2025 in Parliament. With the main vision of ‘Sabka Prayas’ or the whole-of-nation approach, the Union Budget 2024 is here to address key sides of social justice, infrastructure development, and economic growth.
Let us explore the basic highlights of the Interim Union Budget 2024-2025 below.
Interim Union Budget 2024-25: Key Highlights
On February 1, Union Finance Minister Nirmala Sitharaman presented the Interim Union Budget 2024-25, as the main precursor to the upcoming general elections. The budget primarily focused on empowering youth and women while maintaining fiscal responsibility and ongoing capital expenditure. Here are the key points of the union budget 2024:
1. Fiscal Deficit and Tax Rates:
Finance Minister Sitharaman set a target of 5.1% of GDP for the fiscal deficit in FY25, emphasising the importance of fiscal consolidation. Importantly, there were no alterations to the existing direct and indirect tax rates, providing stability to the economic framework.
2. Five ‘Disha Nirdashak’ Baatein:
FM Sitharaman highlighted five important principles for effective governance – ‘Disha Nirdashak’ baatein. This comprised of social justice, focusing on the well-being of the poor, youth, women, and farmers, infrastructure development, using technology for enhanced productivity, and forming a high-power committee to address challenges arising from demographic shifts.
| Principles | Description |
| Social Justice | Effective Governance Model |
| Focus Areas | Poor, Youth, Women, and Farmers |
| Infrastructure | Development of Critical Infrastructure |
| Technology Use | Using Technology for Improved Productivity |
| High-Power Committee | Addressing Challenges Arising from Demographic Shifts |
3. Economic Growth and Performance:
India showcased three consecutive years of 7% GDP growth, establishing itself as the fastest-growing economy within the G20 nations. The finance minister emphasised the government’s commitment to effective development management and prudent economic management, even in challenging times.
4. Continued Government Capital Expenditure:
Emphasising the importance of sustaining economic growth, FM Sitharaman affirmed the continuation of government capital expenditure. This commitment ensures that investments in critical sectors continue, nurturing overall economic development.
5. IMEC Project and Global Collaborations:
Despite challenges in the Red Sea region, the India-Middle East-European Corridor (IMEC) project will proceed. This initiative signifies the government’s dedication to promoting international collaborations and expanding economic corridors.
6. Small Direct Tax Demands Withdrawal:
In a significant move, the government decided to withdraw 1.1 crore outstanding small direct tax demands for specific years. This measure is estimated to cost less than Rs. 3,500 crores to the exchequer, providing relief to taxpayers.
7. Tax Rate Clarification for New Manufacturing Units:
FM clarified that the lower tax rate would not be extended to new manufacturing units established after March 2024. This clarification ensures a clear understanding of tax policies for upcoming businesses.
8. Disinvestment Targets:
DIPAM Secretary Tuhin Kanta Pandey mentioned that there is no fixed target for disinvestment in FY25. This flexibility allows the government to assess and strategise disinvestment based on evolving economic conditions.
9. Fiscal Consolidation and Credit Ratings:
FM Sitharaman conveyed that the government not only aligns with the earlier fiscal consolidation path but is surpassing it. This message was directed towards credit rating agencies, showcasing the government’s commitment to responsible fiscal management.
10. Reassessment of Debt-to-GDP Ratio:
Finance Secretary TV Somanathan highlighted the need to reevaluate the target of reducing the Centre’s debt-to-GDP ratio to 40%. This reassessment recognises the changed economic landscape post-COVID-19, indicating a willingness to adapt targets to current realities.
Union Budget 2024 – Part A
Part A of the union budget 2024 comprises of the following:
1. Social Justice:
The government’s commitment to uplifting the four major castes – the ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth), and ‘Annadata’ (Farmers) – has now taken centre stage.
2. ‘Garib Kalyan, Desh ka Kalyan’:
The mantra of ‘Garib Kalyan, Desh ka Kalyan’ reflects a clear approach of the govt. to social justice. Remarkable steps have been made in reducing multi-dimensional poverty, with the government assisting 25 crore people over the past decade. The utilisation of PM-Jan Dhan accounts in disbursing Direct Benefit Transfers (DBT) amounting to Rs. 34 lakh crores have not only alleviated poverty but also resulted in substantial savings of Rs. 2.7 lakh crores for the Government.
3. Empowering Street Vendors and Vulnerable Groups:
The success of PM-SVANidhi, providing credit assistance to 78 lakh street vendors, is also clearly visible. Schemes like PM-JANMAN Yojana and PM-Vishwakarma Yojana focus on the development of particularly vulnerable tribal groups and offer support to artisans and craftspeople engaged in 18 trades.
4. Welfare of Farmers:
The ‘Annadata,’ or the farmers, have been a key focus area. PM-KISAN SAMMAN Yojana has provided financial assistance to 11.8 crore farmers, while the PM Fasal BimaYojana ensures crop insurance for 4 crore farmers. The integration of 1361 mandis through the Electronic National Agriculture Market (e-NAM) has facilitated trading with a volume of Rs. 3 lakh crores.
5. Women Empowerment:
The momentum for Nari Shakti is clear through initiatives like Mudra Yojana, providing 30 crore loans to women entrepreneurs. Female enrollment in higher education has seen a commendable 28% increase, with over 70% of houses under PM Awas Yojana allocated to women from rural areas.
6. Affordable Housing and Solarisation:
Despite challenges posed by COVID, the PM Awas Yojana (Grameen) is on track to achieve the target of three crore houses soon. The vision extends further with an additional two crore houses planned over the next five years. Rooftop solarisation aims to provide 300 units of free electricity monthly to 1 crore households, promoting sustainability and savings.
7. Healthcare and Agriculture:
Ayushman Bharat, the healthcare cover, is set to be extended to all ASHA workers, Anganwadi Workers, and Helpers. Agriculture and food processing have witnessed significant strides with schemes like Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana benefiting farmers and generating employment.
8. Research and Innovation:
A visionary move in the union budget 2024 is of the establishment of a Rs.1 lakh crore corpus, providing a fifty-year interest-free loan for research and innovation to catalyse growth and development. Additionally, a new scheme is set to be launched, focusing on strengthening deep-tech technologies for defence purposes, aligning with the spirit of ‘atmanirbharta’ or self-reliance.
9. Infrastructure:
In a significant boost to infrastructure, the capital expenditure outlay for development and employment generation is set to increase by 11.1% to Rs.11,11,111 crore, constituting 3.4% of the GDP. The PM Gati Shakti program identifies three major economic railway corridor programs aimed at enhancing logistics efficiency and reducing costs.
10. Aviation and Green Energy:
The aviation sector has witnessed substantial growth, with the number of airports doubling to 149 and 517 new routes carrying 1.3 crore passengers. The commitment to green energy is exemplified by plans to set up coal gasification and liquefaction capacity of 100 MT by 2030, coupled with mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG).
11. Tourism and Investments:
States are encouraged to widely develop iconic tourist centres, with a framework for rating based on quality. Long-term interest-free loans to states for such development are in the offing. Foreign Direct Investment (FDI) inflow from 2014-23 stood at USD 596 billion, twice that of 2005-14, showcasing a conducive investment climate.
Union Budget 2024 – Part B
Part B of the union budget 2024 comprises of the following key details:
1. Taxation Stability:
In a move aimed at providing stability, there are no proposed changes in tax rates for both direct and indirect taxes. This is a commendable step in ensuring continuity and predictability for businesses and individuals.
2. Direct Taxes:
The union budget 2024 also has shown a remarkable achievement in direct tax collection, which has tripled in the last decade. The number of return filers has increased 2.4 times, reflecting enhanced compliance. A striking initiative is the withdrawal of outstanding direct tax demands up to Rs. 25,000 for the period up to FY 2009-10, benefitting a significant number of taxpayers.
3. Tax Benefits and Rationalisation:
Tax benefits extended to Start-Ups and investments made by Sovereign wealth funds or pension funds have been extended until 31.03.2025. The union budget 2024 highlights various tax rationalisation efforts over the years, including increased thresholds for presumptive taxation for retail businesses and professionals, and reduced corporate income tax rates.
4. Indirect Taxes and GST:
Indirect taxes, including Goods and Services Tax (GST), are maintained at existing rates. The positive impact of GST on supply chain optimisation, doubled average monthly gross GST collections, and increased state SGST revenue buoyancy is acknowledged. The reduction in compliance burden and logistics costs has translated into lower prices of goods and services, directly benefiting consumers.
5. Achievements in Taxpayer Services:
The union budget 2024 provides significant achievements in taxpayer services, including a substantial reduction in the average processing time of tax returns, from 93 days in 2013-14 to 10 days presently. The introduction of Faceless Assessment and Appeal further enhances efficiency, and initiatives like updated income tax returns, new form 26AS, and prefilled tax returns simplify the filing process.
6. Customs Reforms and Reduction in Import Release Time:
Reforms in customs have led to a substantial reduction in import release time at Inland Container Depots, Air Cargo complexes, and Sea Ports, contributing to a more efficient and business-friendly environment.
Conclusion
As we discover the highlights of the Interim Union Budget 2024-2025, the common theme that we can see is of inclusive growth, empowerment, and stability. The attention to social justice, infrastructure development, and taxation reforms reflects a clear vision aimed at furthering a strong and self-reliant economy.
The government’s commitment to ‘nation-first’ is clear, and the presented union budget 2024 lays the foundation for a promising economic growth. The upcoming years shall show us more growth, driven by a harmonious blend of strategic policies and public welfare initiatives.
