The ‘interim budget’ for the year 2024-25, presented by the finance minister Nirmala Sitaraman, did not make any populist announcement. The budget did not list out too many new proposals and stuck to the fiscal consolidation path, largely unexpected in an election year. The interim budget seeks to get funds sanctioned only till the elections and the new government would present the complete budget in June-July. Here is a look at some of the key proposals.
The budget has proposed total expenditure of Rs 47.7 lakh crore, a modest increase of 6.2% over FY24. Against this, total receipts are projected at Rs 30.8 lakh crore, increase of 11.6%. The fiscal deficit (FD) is projected at 5.1% of GDP, down from 5.8% in FY24, the current year. The revised estimate for FY24 at 5.8% is marginally lower than budget estimate of 5.9%, quite a rarity. No tax changes have been proposed in keeping with the convention of an ‘interim budget’ and the rates may be tweaked in the final budget.
The budget before the election serves as an opportunity to present the government’s accomplishment and the finance minister spent quite a bit of time on the same. Among the major accomplishments mentioned are –
- An important departure in government’s approach is the shift from ‘provisioning up to village level’ to ‘targeting each household and individual’. Indeed, all government schemes such as housing, water connection, cooking gas, bank accounts etc have targeted individuals.
- Under PM Awas Yojana (Grameen), government is close to achieving the target of construction three crore houses. Two crores more houses will be taken up in the next five years. The total would mean building houses for almost one-fourth of rural households.
- ‘Direct Benefit Transfer’ of Rs 34 lakh crore has been made by the government over the last ten years through PM-Jan Dhan accounts which has helped save Rs 2.7 lakh crore for the Government.
- In response to Covid, government had initiated a scheme to provide small credit to street vendors through which almost 80 lakhs vendors have benefitted. Similarly, 43 crore loans, each under Rs 10 lakh, aggregating to Rs 22.5 lakh crore have been sanctioned to small & micro enterprises under PM Mudra Yojana, more than half of it going to women entrepreneurs.
- Electronic National Agriculture Market (e-NAM) has integrated 1,360 mandis and is providing services to 1.8 crore farmers, nearly 15% of total farmers in India, and recorded total trade of Rs 3 lakh crore. However, the trade volume is quite small and has significant potential to increase.
- Digital public infrastructure (DPI) has emerged as a new ‘factor of production’ and is helping in formalization of the economy.
- Number of airports have doubled to almost 150 and over 500 new routes are carrying 1.3 crore passengers.
Specific proposals –
- Promotion of private and public investment in post-harvest activities such as storage, supply chains, primary and secondary processing etc. Laying emphasis on rural livelihood enhancement, focus will be stepped up to enhance aquaculture productivity from existing 3 to 5 tons per hectare.
- A corpus of Rs 1 lakh crore will be established to provide long-term financing at low or nil interest rates to encourage private sector to scale up research and innovation in sunrise domains.
- A new scheme will be launched for strengthening deep-tech technologies for defence purposes.
- Buoyed by the success of the rural housing scheme, FM announced a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” in urban area to buy or build their own houses.
- Outlay on capex increased by 11% to Rs 11 lakh crore. Capex has increased by three times over last four years.
- Proposal to build three major economic railway corridors to improve logistics and decongest existing corridors. While the proposal is much desired, projects implementation in railways have been somewhat slow and special thrust would be needed to achieve success like in case of highways.
- Viability gap funding (VGF) will be provided to install offshore wind energy plant with total capacity of 1 GW. VGF is an important means to make a project commercially viable. For instance, assume a project which entails a cost of Rs 100 crore but would be commercially viable only if the cost comes down to Rs 90 crore. So, in this case, government would provide VGF of Rs 10 crore as grant.
- Building up of a corpus of Rs 75,000 crore to provide 50-year interest free loan to states which undertake reforms enabling growth and development.
- In line with efforts to improve ease of living, proposal to withdraw direct tax demands, dating as far back as the year 1962 (!), up to Rs 25,000 till FY10 and up to Rs 10,000 for FY11-FY15. The proposal is expected to benefit as many as 1 crore tax payers.