Scheduled for February 1, 2024, Finance Minister Nirmala Sitharaman is poised to unveil the much-anticipated Interim Budget of 2024-25 in India. This pivotal annual event will delineate the government’s fiscal policies and sector-wise allocations, holding immense significance for businesses, individuals, and the nation’s economic course.
The budget address is expected to reveal pivotal initiatives, economic reforms, and financial strategies geared towards fostering robust growth and development in the Indian economy. As stakeholders eagerly await, the budget’s impact extends beyond sectors, shaping the trajectory of the entire nation.
Topics Covered:
- What are the Key Expectations from the interim Budget 2024?
- What were the Key Highlights of the Union Budget 2023?
- What’s an Interim Budget?
- How’s an Interim Budget, Unlike a Regular One?
- Economic Survey?
- Conclusion
What are the Key Expectations from the interim Budget 2024?
1. Tax Relief and Standard Deduction
Expectations run high for salaried employees, anticipating relief in income tax and a potential increase in the standard deduction. Analysts suggest revisiting the standard deduction application as a percentage of an individual’s salary income for fair benefits.
2. TCS Exemption Proposal
Forecasts hint at a probable exemption from Tax Collected at Source (TCS) on individual overseas credit and debit card expenditures, offering potential relief capped at Rs 7 lakh per financial year.
3.Section 80D Deduction Boost
Individuals hope for an upward revision in the deduction limit under Section 80D for medical insurance premiums. The expectation is to raise it from Rs 25,000 to Rs 50,000 for individuals and from Rs 50,000 to Rs 75,000 for senior citizens, addressing the rising costs of healthcare.
4.STT Reassessment or Reduction
Analysts anticipate revisiting the Security Transaction Tax (STT) structure, with potential removal or reduction, particularly in the cash market, in response to persistent demands.
5.Tax Exemption Limit Adjustments
An annual expectation revolves around adjustments in income tax rates and an upward revision in tax exemption limits for individuals.
6.Crypto-market Regulatory Framework
With the Central Bank Digital Currency (CBDC) in play, analysts foresee the introduction of a comprehensive regulatory framework for cryptocurrencies, building on discussions at the G20 Summit.
7.Railways Budgetary Allocations
Projections suggest a substantial budget allocation of approximately Rs 3 lakh crore for the Railways Department, aligning with plans for fuel-efficient Vande Bharat trains and infrastructure development.
8.Pharma Sector Funding Anticipation
The pharmaceutical sector anticipates substantial budget allocations, acknowledging its scale, success rate, and significant contributions to the economy.
9.Real Estate Industry Recognition
Expectations from the real estate sector include seeking official industry status, facilitating easier access to loans and credit, and potential interest rate reductions on project finance.
10.Ayushman Bharat Expansion Moves
The healthcare sector envisions an expansion of Ayushman Bharat, with a doubling of insurance coverage under the Pradhan Mantri Jan Arogya Yojana (PMJAY) from Rs 5 lakh to Rs 10 lakh.
11.Energy Sector Investment Prospects
Anticipations in the energy sector, particularly oil and gas, revolve around substantial allocations from the Budget 2024 to promote sustainable practices and infrastructural growth.
12.Agriculture Sector’s Recovery Push
Post El Nino’s impact, the agriculture sector expects a significant budgetary allocation to recover from weather-related challenges, aiming for a positive stride in the interim budget 2024.
The Interim Budget 2024 is poised to address a diverse range of expectations, from tax relief to sector-specific allocations, reflecting a holistic approach toward India’s economic well-being.
What were the Key Highlights of the Union Budget 2023?
On February 1, 2023, Finance Minister Nirmala Sitharaman unveiled the budget for the forthcoming fiscal year. This financial roadmap is crafted to foster an economy that is not only inclusive but also empowers diverse sectors.
1.Revised Direct Tax Regime
The budget introduced a much-anticipated revised income tax slab, providing relief for the salaried class with simplified tax structures. Individuals earning up to Rs 7 lakh p.a. in the new tax regime are exempt from income tax.
2.Infrastructure Development
A significant boost in capital expenditure, with Rs 10 lakh crore allocated, marked a 33% increase from the previous year. The focus on infrastructure development, including roads, railways, airports, and ports, aims to stimulate economic growth and create job opportunities.
3.Surcharge Relief to HNIs
High Net-Worth Individuals benefited from a reduced surcharge, dropping the effective tax rate to 39% from the previous 42.74%.
4.Agriculture and Rural Economy
The budget allocated Rs 2.83 lakh crore for agriculture and rural development, emphasising initiatives to support farmers, increase income, and generate employment in rural areas.
5.Entrepreneurship Promotion
Various measures were proposed to encourage entrepreneurship, including tax incentives for start-ups and improved access to financing.
6.Empowering Women
A noteworthy allocation of Rs 28,600 crores for women-centric schemes and programs, demonstrates a commitment to women’s empowerment.
7.Healthcare Boost
An allocation of Rs 64,180 crores for healthcare, with a focus on enhancing affordable healthcare facilities, particularly in rural areas.
8.Digitalisation Promotion
Rs 3,000 crores allocated to promote digitalisation, emphasising increased access to digital infrastructure and services.
9.Education Improvement
An allocation of Rs 93,224 crores for education, with a focus on improving quality and accessibility, including plans for a National Digital Library.
10. Green Growth Strategy
Prioritising ‘green growth’ by promoting green fuel, energy, and building practices to reduce carbon intensity and create green job opportunities.
Let’s learn more about the concept of an interim budget and how it differs from the regular budget below.
What’s an Interim Budget?
An interim budget is a financial statement presented by the government of a country, typically in the middle of its fiscal year, and it covers the upcoming financial year until a full-fledged budget is presented. In the Indian context, an interim one is usually presented in the election year when the government’s term is about to end.
The primary purpose of this is to meet the government’s expenditure requirements until a new government takes office and presents a comprehensive budget. It generally includes estimates for government revenues and expenditures for the upcoming financial year and any policy changes deemed necessary for the interim period. However, it refrains from introducing new long-term policies or major fiscal reforms, as it is considered a caretaker budget.
It serves as a stop-gap arrangement, allowing for the continuity of government functions and public services until the new finance minister has the opportunity to present a detailed budget aligned with its vision and priorities. It helps maintain financial stability during the transitional period between governments while avoiding major policy decisions that the newly elected representatives should ideally make.
How’s an Interim Budget, Unlike a Regular One?
An interim budget differs from a regular one in several key aspects. Firstly, an interim budget is presented when the government is in its last year of office, especially in election years, while a regular budget is presented annually at the beginning of the fiscal year. The interim budget serves the purpose of ensuring continuity in government spending until a new administration takes charge and introduces its policies.
Secondly, the interim budget is often considered a ‘vote on account,’ emphasising securing funds for essential government functions without making significant policy changes. In contrast, a regular budget outlines the government’s comprehensive financial plan for the entire fiscal year, encompassing new policy initiatives, reforms, and long-term strategies.
Additionally, while a regular budget involves a detailed examination of allocations across sectors, an interim budget typically maintains the status quo, avoiding major alterations. The emphasis is on temporary financial arrangements rather than introducing transformative fiscal measures.
| Aspect | Interim Budget | Regular Budget |
| Timing | Presented in the election year or last year of the government’s term | Presented annually at the beginning of the fiscal year |
| Policy Changes | Generally avoids introducing major policy changes or long-term reforms | Includes new policy initiatives and long-term strategies |
| Focus | Primarily focused on meeting immediate expenditure needs | Comprehensive financial plan for the entire fiscal year |
| Government’s Term | Presented by the outgoing government or in a transitional period | Presented by the government in office at the beginning of its term |
Economic Survey
The Economic Survey is an annual document prepared by the Ministry of Finance, Government of India, usually presented in the Parliament a day before the Union Budget. It serves as a detailed review and analysis of the country’s economic performance over the past year and provides insights into the current economic situation. The survey is a crucial precursor to the Union Budget as it sets the stage for the government’s fiscal policies and priorities.
The Economic Survey covers a wide range of economic aspects, including macroeconomic indicators, sector-wise analysis, policy recommendations, and future outlook. It offers a detailed examination of various economic parameters such as GDP growth, inflation, employment trends, fiscal deficit, and external trade. The document also delves into specific sectors like agriculture, industry, and services, providing a holistic understanding of the overall economic landscape.
One notable feature of the Economic Survey is its focus on research and data-driven analysis. It often incorporates innovative methodologies and economic theories to present a nuanced perspective on economic issues. The document also highlights the challenges and opportunities facing the Indian economy and suggests policy measures to address them.
Conclusion
The Union Budget 2023 demonstrated a commitment to inclusive growth, with notable provisions for various sectors. As the nation awaits the Interim Budget 2024, the Finance Minister faces the challenge of sustaining economic recovery while addressing fiscal concerns. The anticipated focus on strategic fiscal management and targeted investments aligns with the ongoing efforts to bolster India’s economic trajectory.
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