Budget 2024 Highlights and Updates

In her sixth consecutive budget presentation, Union Finance Minister Shrimati Nirmala Sitharaman unveiled the Interim Budget 2024 amidst the looming Lok Sabha elections. Eschewing populist measures, she maintained status quo on direct and indirect tax rates. With a forward-looking vision spanning the next five years, Hon’ble Finance Minister forecasted unprecedented growth, earmarking a substantial Rs 11.1 lakh crore for capital expenditure in the upcoming fiscal year, marking an 11% surge from the current year. Noteworthy is the government's ambition to trim the fiscal deficit target to 5.1% of GDP in the forthcoming fiscal, with a further target of 4.5% in FY26. Given its interim nature, a more comprehensive fiscal year budget is slated for presentation post the formation of a new government following the Lok Sabha Elections. Here are the key highlights:

•          Direct and indirect tax rates remain unchanged. The government has waived income tax demands up to ₹25,000 (up to 2009-10) and ₹10,000 from 2010-11 to 2014-15, benefiting approximately one crore taxpayers.
•         A new scheme is set to aid middle-class individuals residing in rented accommodations to purchase or construct their own homes. Additionally, tax benefits for start-ups and investments by sovereign wealth or pension funds have been extended for an additional year until March 31, 2025.
•          Capital expenditure sees an 11% increase, now reaching ₹11.11-lakh crore. Meanwhile, the fiscal deficit projection for FY25 stands at 5.1%, lower than the revised estimate of 5.8% in FY24.
•          Government borrowing for the next fiscal year is slated at ₹14.13-lakh crore, a decrease from ₹15.43 lakh crore in FY24. The expected growth rate for nominal GDP in FY25 is 10.5%.
•          Disinvestment from central public sector enterprises (CPSEs) is targeted to reach ₹50,000 crore for FY25, up from ₹30,000 crore in FY24. The gross tax revenue goal for FY25 sees an 11.46% increase to ₹38.31-lakh crore, with direct tax collection targeted at ₹21.99-lakh crore and indirect tax at ₹16.22-lakh crore.
•          The government plans to publish a white paper addressing pre-2014 economic mismanagement. Next-generation reforms will be introduced in collaboration with states and stakeholders.
•          Additionally, a high-powered panel will be established to tackle population growth challenges and demographic changes.

In summary, the interim budget serves as a temporary financial blueprint during an election year, catering to immediate fiscal requirements until a new government assumes office. The comprehensive union budget is slated for unveiling post-elections, usually around April-May. As customary, the interim budget tends to avoid major policy pronouncements and significant reforms.

(Internal Research)