Understanding the Interim Union Budget for FY2024-25
The Interim Union Budget for FY2024-25: Key Highlights
The Interim Union Budget for FY2024-25 has caught many by surprise, with the government identifying and addressing sectors that require immediate attention. The Finance Minister highlighted that India has successfully navigated numerous challenges to improve its economic standing over the last decade.
Let’s delve into the major highlights of the Interim Union Budget 2024.
Macro Highlights
- Domestic GDP: The budget projects a nominal GDP growth rate of 10.5% for FY24-25, aligning with market expectations.
- Deficits: The budget sets a fiscal deficit target of 5.1% for FY25, adhering to the fiscal consolidation path.
- Government Borrowings: Gross market borrowing is reduced to Rs. 14.1 lakh crore through bonds in FY25, with net borrowing at Rs. 11.75 lakh crore.
- Revenue Receipt: Total revenue receipt for FY25 is revised to Rs. 38.8 lakh crore, exceeding initial estimates.
- Divestment Target: The divestment target for FY25 is set at Rs. 50,000 crore.
Key Insights into the Interim Budget 2024-25
- Capital Expenditure: The capital expenditure (CAPEX) for FY25 is increased by 11.1% to Rs. 11.11 lakh crore, representing 3.4% of the domestic GDP.
- GST Collection: The average monthly gross Goods & Services Tax (GST) collection has doubled to Rs. 1.66 lakh crore in FY24, indicating a strong domestic economy.
- Housing: A new housing scheme will be introduced for the middle class, with a goal of constructing 2 crore more houses under PMAY-Gramin.
- Direct Benefit Transfers: The Direct Benefit Transfers scheme has saved the government Rs. 2.7 lakh crore, and crop insurance has been provided to 4 crore farmers under PM Fasal Bima Yojana.
- Mandis Integration: The government has integrated 1,361 mandis with Rs. 3 lakh crore in trading volume, aiming to include farmers in India’s growth story.
- Taxation: There will be no tax liability for individuals with income up to Rs. 7 lakhs under the new tax regime, now the default system.
Allocation of Funds to Ministries
- Defence: INR 6.2 lakh crore
- Road Transport and Highways: INR 2.78 lakh crore
- Railways: INR 2.55 lakh crore
- Consumer Affairs, Food & Public Distribution: INR 2.13 lakh crore
- Home Affairs: INR 2.03 lakh crore
- Rural Development: INR 1.77 lakh crore
- Chemicals and Fertilisers: INR 1.68 lakh crore
- Communications: INR 1.37 lakh crore
- Agriculture and Farmers’ Welfare: INR 1.27 lakh crore
Proposed Allocation for Major Government Schemes
- Mahatma Gandhi National Rural Employment Guarantee Scheme: Rs. 86,000 crore
- Ayushman Bharat-PMJAY: Rs. 7,500 crore
- Production Linked Incentive Scheme: Rs. 6,200 crore
- Semiconductor Development: Rs. 6,903 crore
- Solar Power (Grid): Rs. 8,500 crore
- National Green Hydrogen Mission: Rs. 600 crore
Sectors in Focus during the Interim Budget
- Infrastructure: The FY25 Capex allocation increase by 11.1% to Rs. 11.11 lakh crore is expected to boost infrastructure-related sectors, including housing, roads, and cement. The capital outlay represents 3.4% of GDP.
- Railways: The government plans to execute three significant railway corridor programs to improve logistics efficiency and reduce costs.
- Aviation: The UDAN scheme will expand current airports and develop new ones. The number of airports is set to double, and Indian carriers have ordered 1,000 new aircraft.
- Housing: Pradhan Mantri Awas Yojana (Grameen) aims to provide 3 crore houses, with an additional target of 2 crore houses over the next five years. A new scheme will facilitate home ownership for the middle class.
- Agriculture and Food Processing: The government aims to promote private and public investment in post-harvest activities and extend utilization across agro-climatic regions. Plans include the Atmanirbhar Oilseeds Abhiyaan for self-sufficiency in oilseeds and intensified aqua schemes to boost productivity and employment.
- Green Energy: The government supports the Electric Vehicle (EV) ecosystem through manufacturing and charging infrastructure. A new bio-manufacturing scheme will encourage sustainable development, and the Rooftop solar scheme aims to provide free electricity to one crore people.
Social Schemes, Initiatives, and Financing
- Lakhpati Didi Yojana: The target budget will increase from 2 crore to 3 crore.
- Ayushman Bharat: Coverage will extend to ASHA, Anganwadi workers, and maternal and child-care schemes.
- Housing: The government plans to build 2 crore houses over the next five years, extending benefits to the middle-class population.
- Technology and Innovation: The government offers a Rs. 1 lakh crore corpus with a 50-year interest-free loan to promote tech-savvy growth.
- Taxation: There are no changes in direct and indirect taxation.
Conclusion
The Interim Budget 2024 emphasizes the government’s commitment to making India a sustainable, developed nation. A significant portion of the Rs. 1 lakh crore interest-free loans is expected to support states in technology, innovation, research, and tourism, ensuring sustained capital expenditure. The goal to upgrade 40,000 wagons will drive demand for wagon processing companies, contributing to the positive outlook for railways.
FAQ
1. What is the projected GDP growth rate for FY24-25?
The nominal GDP growth rate for FY24-25 is projected at 10.5%.
2. What is the fiscal deficit target for FY25?
The fiscal deficit target for FY25 is set at 5.1%.
3. How much is the capital expenditure (CAPEX) for FY25?
The capital expenditure for FY25 is increased by 11.1% to Rs. 11.11 lakh crore.
4. What is the new tax regime’s income threshold for no tax liability?
Individuals with income up to Rs. 7 lakhs will have no tax liability under the new tax regime.
5. What are the major allocations for government ministries in the budget?
Major allocations include Defence (INR 6.2 lakh crore), Road Transport and Highways (INR 2.78 lakh crore), and Railways (INR 2.55 lakh crore).
6. What are the key schemes funded by the government in the budget?
Key schemes include Mahatma Gandhi National Rural Employment Guarantee Scheme (Rs. 86,000 crore) and Ayushman Bharat-PMJAY (Rs. 7,500 crore).
7. What initiatives are planned for the agriculture sector?
The government plans to encourage investment in post-harvest activities, extend utilization across agro-climatic regions, and promote the Atmanirbhar Oilseeds Abhiyaan and aqua schemes.
8. How does the budget support the green energy sector?
The budget supports the green energy sector through the Electric Vehicle ecosystem, bio-manufacturing schemes, and the Rooftop solar scheme.