The interim budget 2024 has been presented by the finance minister. It lays out the government’s spending plans for the first half of the upcoming fiscal year. This article delves into the key highlights of the interim budget 2024.
FM Nirmala Sitharaman presented the Interim Budget 2024 in the Lok Sabha after approval from the Union Cabinet earlier.
The key highlights of the interim budget 2024 include no tax revisions, affordable houses, upgrading maternal and child care, free electricity, Atmanirbharta in agriculture and other sectors, fast fast-tracking infrastructure to list a few.
What is an Interim Budget?
An interim budget is essentially a temporary financial statement presented by the government. It is typically introduced in a year when general elections are scheduled, and a new government is expected to take power.
The main purpose of the interim budget is to allow the government to continue its operations and meet its financial obligations until the new government is formed and presents the full budget.
The interim budget covers the government’s expenditures and receipts for a part of the fiscal year.
Key Characteristics of an Interim Budget:
- Duration: Unlike the full annual budget, which outlines financial plans for the entire fiscal year, the interim budget usually covers a shorter period—often a few months until the new government is in place.
- Expenditure Approval: It seeks the Parliament’s approval for incurring expenses and withdrawing funds from the Consolidated Fund of India for the ongoing operations of the government until the full budget is passed.
- Limited Announcements: The interim budget generally avoids making any major policy announcements or introducing new schemes. It is more about maintaining continuity in government spending and operations.
- Vote on Account: The primary component of an interim budget is the “vote on account,” which seeks approval for essential government spending, including salaries, administrative expenses, and ongoing project expenditures, without a detailed discussion on each demand.
- Revenue and Expenditure Estimates: It provides an overview of the government’s revenue and expenditure for the part of the fiscal year. However, it might not include detailed economic projections or tax proposals, which are typically reserved for the full budget.
- Political Considerations: Given its timing before elections, the interim budget is often scrutinized for any measures that could influence voters, though traditionally it is expected to be a neutral financial statement.
- Continuity of Government Operations: It ensures that the government has the legal authority to spend funds and keep its operations running smoothly, avoiding any disruptions in public services.
- Transition to New Government: It allows the incoming government to have a say in the financial plans for the majority of the fiscal year, enabling them to implement their policies and priorities through a full budget.
- Economic Stability: By ensuring that government expenditures and operations continue unhindered, the interim budget plays a role in maintaining economic stability.
Interim Budget 2024: Key highlights
The Finance Minister confirmed the continuation of existing tax rates, covering direct, and indirect taxes, and export duties. The budget introduced a housing scheme for the deserving middle class, focusing on those living in rented houses, slums, chawls, or unauthorized colonies.
Amid various announcements benefiting youth, the impoverished, women, and farmers, the FM highlighted the extension of Ayushman Bharat healthcare coverage to all ASHA and Anganwadi workers and helpers.
This year, the total allocation under the gender budget stands at ₹three lakh crore, which is almost 6.5% of the total expenditure. This is an increase of almost 40% over the gender budget for the previous year and the highest increase in the last decade.
Taxation, GDP, FDI, Expenditure
- There are no changes in direct, or indirect tax rates
- The government withdrew income tax demands up to ₹25,000 (till 2009-10) and ₹10,000 from 2010-11 to 2014-15. This will benefit about one crore taxpayers.
- Tax benefits to start-ups and investments made by sovereign wealth or pension funds extended by 1 year till March 31, 2025
- Gross tax revenue target for FY25 hiked 11.46% to ₹38.31-lakh crore, from ₹34.37 lakh crore in FY24
- The direct tax collection target is set at ₹21.99-lakh crore, while that of indirect tax is at ₹16.22-lakh crore
- Capital expenditure hiked 11% to ₹11.11-lakh crore
- The fiscal deficit for FY25 is projected at 5.1%, lower than the revised estimate (5.8%) in FY24
- Govt to borrow ₹14.13-lakh crore in next fiscal, lower than ₹15.43 lakh crore in FY24
- Nominal GDP growth for FY25 is projected at 10.5%
- Mop-up from central public sector enterprises (CPSEs) disinvestment pegged at ₹50,000 crore for FY25, up from ₹30,000 crore in FY24
- The government will release a white paper on the mismanagement of the economy before 2014.
The following welfare schemes were mentioned in the interim budget 2024:
- Direct Benefit Transfer’ of 34 Lakh Cr from the Government using PM-Jan Dhan accounts has led to savings of 2.7 Lakh Cr for the Government.
- PM-SVANidhi has provided credit assistance to 78 Lakh Street vendors. From that total, 2.3 Lakh have received credit for the third time.
- PM-JANMAN Yojana reaches out to the particularly vulnerable tribal groups, who have remained outside the realm of development so far.
- PM-Vishwakarma Yojana provides end-to-end support to artisans and craftspeople engaged in 18 trades.
- Every year, under PM-KISAN SAMMAN Yojana, direct financial assistance is provided to 11.8 Cr farmers, including marginal and small farmers. Crop insurance is given to 4 Cr farmers under PM Fasal Bima Yojana.
- PM Awas Yojana (Grameen): India is close to achieving the target of three crore houses. Two crore more houses will be taken up in the next five years to meet the requirement arising from an increase in the number of families.
- The government will adopt economic policies that foster and sustain growth, facilitate inclusive and sustainable development, improve productivity, create opportunities for all, help them enhance their capabilities, and contribute to the generation of resources to power investments and fulfill aspirations.
- Guided by the principle ‘Reform, Perform, and Transform’, the Government will take up next-generation reforms, and build consensus with the states and stakeholders for effective implementation.
- Government to ensure timely and adequate finances, relevant technologies, and appropriate training for the MSMEs to grow and also compete globally.
- The government will facilitate sustaining high and more resource-efficient economic growth. This will work towards energy security regarding availability, accessibility, and affordability.
- To meet the investment needs the Government will prepare the financial sector in terms of size, capacity, skills, and regulatory framework.
Housing, electricity, and solarization
- The government will launch a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” to buy or build their own houses.
Through rooftop solarization, one crore households will be enabled to obtain up to 300 units of free electricity every month. The following benefits are expected:
- Savings of up to fifteen to eighteen thousand rupees annually for households from free solar electricity and selling the surplus to the distribution companies
- Charging of electric vehicles
- Entrepreneurship opportunities for a large number of vendors for supply and installation
- Employment opportunities for the youth with technical skills in manufacturing, installation, and maintenance.
- The government plans to set up more medical colleges by utilizing the existing hospital infrastructure under various departments. A committee for this purpose will be set up to examine the issues and make relevant recommendations.
- The government will encourage vaccination for girls in the age group of 9 to 14 years for the prevention of cervical cancer.
- Various schemes for maternal and child care will be brought under one comprehensive program for synergy in implementation. Upgradation of Anganwadi centers under “Saksham Anganwadi and Poshan 2.0” will be expedited for improved nutrition delivery, early childhood care, and development.
- The newly designed U-WIN platform for managing immunization and intensified efforts of Mission Indradhanush will be rolled out expeditiously throughout the country.
- Healthcare cover under the Ayushman Bharat scheme will be extended to all ASHA workers, Anganwadi Workers, and Helpers.
The budget focuses on investing in Atmanirbharta agriculture.
- Public and private investments will be promoted in post-harvest activities.
- Atmanirbhar oilseeds Abhiyan: Strategy to be formulated for achieving self-reliance in oilseeds.
- Nano DP: Application on various crops will be expanded in all agroclimatic zones.
- A new program will be launched to support dairy farmers. The program will be built on the success of existing schemes such Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry.
Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to:
- Enhance aquaculture productivity from existing 3 to 5 Tonnes per hectare
- Double exports to INR 1 Lakh Cr and
- Generate 55 Lakh employment opportunities shortly
- Five integrated aquaparks will be set up
Research and Innovation
- A corpus of INR 1 Lakh Cr will be established with a fifty-year interest-free loan. The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates. This will encourage the private sector to significantly scale up research and innovation in sunrise domains.
- A new scheme will be launched for strengthening deep-tech technologies for defense purposes and expediting ‘Atmanirbharta’.
- The outlay for the next year is being increased by 11.1% to eleven lakh, eleven thousand, one hundred and eleven crore rupees (INR 11,11,111 Cr). This would be 3.4% of the GDP.
- 40,000 normal rail bogies to be transformed to Vande Bharat standards.
- Three major economic railway corridor programs will be implemented. These are:
- Energy, mineral, and cement corridors
- Port connectivity corridors
- High-traffic density corridors
- The projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity. They will improve logistics efficiency and reduce costs.
- Together with dedicated freight corridors, these three economic corridor programs will accelerate our GDP growth and reduce logistic costs.
- Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation. Expansion of these systems will be supported in large cities focusing on transit-oriented development.
- The number of airports has doubled to 149. The rollout of air connectivity to tier-two and tier-three cities under the UDAN scheme has been widespread. Five hundred and seventeen new routes are carrying 1.3 Cr passengers.
- Indian carriers have proactively placed orders for over 1000 new aircraft.
- Expansion of existing airports and development of new airports will continue expeditiously.
- Towards meeting our commitment to ‘net zero’ by 2070, the following measures will be taken.
- Viability gap funding will be provided for harnessing offshore wind energy potential for an initial capacity of one giga-watt.
- A coal gasification and liquefaction capacity of 100 MT will be set up by 2030. This will also help in reducing imports of natural gas, methanol, and ammonia.
- Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be mandated.
- Financial assistance will be provided for the procurement of biomass aggregation machinery to support collection.
- The government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure.
- Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanisms.
Bio-manufacturing and Bio-foundry
- A new scheme of bio-manufacturing and bio-foundry will be launched. This will provide environment-friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals, and bio-agri-inputs. This scheme will also help in transforming today’s consumptive manufacturing paradigm to one based on regenerative principles.
Blue Economy 2.0
- For promoting climate-resilient activities for Blue Economy 2.0, a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with an integrated and multi-sectoral approach will be launched.
- States will be encouraged to take up comprehensive development of iconic tourist centers, branding and marketing them at a global scale.
- A framework for rating the centers based on the quality of facilities and services will be established.
- Long-term interest-free loans will be provided to States for financing such development on a matching basis.
- To address the emerging fervor for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. This will help in generating employment also.
The Interim budget 2024 also mentioned that the Government will form a high-powered committee for an extensive consideration of the challenges arising from fast population growth and demographic changes.
After the general elections, once the new government is in place, a full budget is usually presented. This budget may revise the estimates provided in the interim budget and outline the new government’s comprehensive financial and policy plans for the remainder of the fiscal year.
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-Article by Swathi Satish