- Finance Minister Nirmala Sitharaman will, at 11 am, present the Modi 2.0 government's last Budget before the general elections, which is likely to contain a mix of measures for the economy and electorally significant segments like the youth, women, farmers and the poor
- Her sixth straight Budget will present a political document with a snapshot of the Modi government's triumphs over the last 10 years and pointers to how it wants to take the country forward
- The Budget she will present is technically a vote on account and popularly termed an interim Budget as it seeks Parliament's nod for a grant in advance to meet the central government's essential expenditure for the first four months of the new fiscal year that starts in April
- A vote on account seeks approvals for essential expenditure outlays until the polls, while the interim Budget broadly includes an assessment of the current state of the economy, current/capex expenditures, and receipts, as well as revised estimates of the current financial year and estimates for the year ahead
- The interim Budget presents an occasion for spectacle just weeks ahead of the Model Code of Conduct coming into force
- A new government elected after the April/May general elections will present the full Budget, likely in July
- Purpose of government spending: Improving quality of life
- Fairness with economic rationale as the main principle for allocation
- Public provision of services: Get guided by changes in cost of living
- Negotiation for resources is a legitimate instrument, but timing of public spending to election cycles is not
- Focus on provision of quality public service, and not the lazy substitutes
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A judicious mix of economic reforms and social schemes will give the interim budget a respectable look.
At a time when levels of unemployment and inflation are ruling high, the government’s focus on the youth is reasonable
In order to help improve farmers’ income, the government may want to look at the latest technologies and new markets
Welfare schemes on housing, water and electricity look unavoidable
There is talk of providing relief on fuel prices and taxes
Industry group CII has requested that capital expenditure be increased by a fifth to Rs 12 lakh crore over last year’s allocation
CII has also asked the Centre to expand support to state capital expenditures in the form of interest-free, 50-year loans to the tune of about Rs 30,000 crore
- FICCI recommends rationalizing the patent box regime by extending the 10% concessional tax rate to sale of patented products made in India
- For MSMEs, FICCI calls for revising qualifying criteria for mandatory TReDS platform registration to companies with over Rs 250 crore turnover, against the current Rs 500 crore threshold
- On easing compliances, FICCI suggests rationalizing TDS rates into 2-3 slabs and introducing a small negative list of payments not liable for TDS
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Bibek Debroy, Chairman, Economic Advisory Council to the PM explains, "Vote on Account is explicitly mentioned in the Constitution’s Article 116. Parliamentary approval is required for expenditure out of the Consolidated Fund (Articles 113, 114). When this is not possible and the prescribed procedures cannot be followed, Article 116 provides a temporary reprieve. After all, the government cannot cease to function because it has no money. This provision is used when elections have been called and the incumbent government is a caretaker."
- Before the FM presents the vote on account, here is a quick look at the credit flow numbers for the last 9 months (Apr—Dec2023).
- At ₹22.8 trillion, in the first 9 months of this fiscal year, credit flow is a 1.6x, compared to ₹14.1 trillion for the same period, previous fiscal.
- Credit flow growth across sectors, such Agri (1.5x), MSME (1.7x), Infra (6.2x) and Services (1.4x), over previous period, is outstanding!
- Rural credit is booming, which discredits all talk of rural distress.
-With such credit flow numbers, 7% plus growth looks like the new normal in FY2024 and beyond. - SBI Research
Finance Minister Nirmala Sitharaman in her interim budget 2024 speech said that the centre has set a fiscal deficit target of 5.1% for FY25, with gross borrowings at Rs 14.13 lakh crore.
The fiscal deficit target has been reduced based on the assumption that there will be a surge in tax collection.
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Mayuresh Raut, Co-founder & Managing Partner, Seafund, says the FM's proposal for extension of tax benefits to start-ups indicates that there will be continuation of beneficial policies and friendly institutional investor policies.
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- The government has estimated its total tax revenue to grow by 11.5% to Rs 38.3 lakh crore in FY25, up from the revised FY24 estimate of Rs 34.37 lakh crore
- The FY25 estimate is 14% higher than the FY24 budget estimate of Rs 33.6 lakh crore
- The government hopes corporate tax collection will be robust in FY25, with collections increasing 13% to Rs 10.4 lakh crore over the revised FY24 estimate of Rs 9.22 lakh crore
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“A corpus of 1 lakh crore rupees will be established with a 50 year interest free loan. The corpus will provide long term financing or refinancing with long tenures and low or nil interest rates,” the FM said, adding that this measure will help in stepping up research and innovation facilitating the progress of the country.
The Opposition expressed disappointment at the interim budget presented by Finance Minister Nirmala Sitharaman on Thursday, saying the government dresses up its failures as successes.
Former Union Finance Minister P Chidambaram declared the budget "callous".
The veteran congress leader accused the government of betraying the expectations of the people and being disconnected from the real-life concerns of the people regarding their livelihoods and the widening wealth gap between the rich and poor.
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