India's Interim Budget 2024
Understanding Interim Budgets:
An interim budget is essentially a
temporary financial plan presented by the outgoing government when general
elections are imminent or have been announced. It primarily aims to keep the
government running until a new government is formed and can present a
full-fledged budget.
Economic Landscape:
Before dissecting the Interim Budget of 2024, it's essential to grasp the economic backdrop against which it was crafted. India, like the rest of the world, has been navigating through the aftermath of the COVID-19 pandemic, grappling with economic slowdowns, inflationary pressures, and employment challenges.
Key Highlights and Provisions:
Continuity in Essential Spending: The Interim Budget of 2024 ensures continuity in essential spending, such as salaries, pensions, and interest payments, to keep the government machinery running smoothly during the transitional phase.
Focus on Welfare Schemes: Despite being an interim budget, there may be provisions for existing welfare schemes aimed at social security, healthcare, education, and rural development. These schemes play a crucial role in addressing socio-economic disparities and uplifting marginalized communities.
Infrastructure and Development Projects: The interim budget might allocate funds for ongoing infrastructure and development projects to ensure their momentum is not disrupted during the transition period. These projects are vital for fostering economic growth and creating employment opportunities.
Taxation and Fiscal Measures: While significant taxation reforms are typically avoided in interim budgets, there might be minor adjustments or clarifications in tax policies to provide stability and certainty to taxpayers.
Contingency Reserves: Interim budgets often include provisions for contingency reserves to address unforeseen expenditures or emergencies that may arise during the transitional period.
Implications and Considerations:
Limited Policy Changes: Interim budgets are inherently constrained in their scope for introducing new policy measures or significant spending initiatives, as they are intended to maintain continuity rather than usher in major policy shifts.
Expectations for the Full Budget: With a new government set to take office after the elections, stakeholders will keenly await the presentation of the full-fledged budget, which will provide a clearer roadmap for the government's economic agenda and priorities.
India's Interim Budget of 2024 serves as a bridge between two phases of governance, offering stability and continuity during a period of transition. While it may not introduce groundbreaking reforms, it lays the groundwork for the incoming government to build upon. As the nation anticipates the formation of a new government and the presentation of the full budget, the interim budget provides insights into the government's commitment to fiscal prudence and socio-economic welfare amidst uncertainty.
Key points from the Interim Budget 2024 :
Consolidation Effort: The fiscal
target has been redressed to 5.1% for FY25, aiming for 4.5% by FY26.
Infrastructure Push: Capital expenditure increased by 11.1% to Rs.11.1 lakh crore, with a focus on railways, roads, and waterways.
Agriculture and Rural Development: To ensure faster growth of this sector, the government will further promote private and public investment in post-harvest activities, marketing and branding. Allocation increased for PM Kisan Samman Nidhi Yojana, natural farming and rural infrastructure.
Tax: There will be no changes made in the tax structure, be it direct or indirect tax. The total revenue receipts in FY25 is now being estimated at Rs.30 lakh crore, up from the revised estimate of Rs.26.99 lakh crore in FY24.
Tourism: The government will encourage states to develop iconic tourist centres. Long-term interest free loans will be provided to states in to encourage development.
Investments: For encouraging sustained foreign investment ,the government is negotiating bilateral investment treaties with foreign partners, in the spirit of 'first develop India'.
Technology: A corpus of Rs.1 lakh crore will be established with a 50 year interest-free loan. The corpus will provide long-term financing or refinancing with long tenors and low or nil private sector to scale up research and innovation.
Housing: The government is targetting building additional 2 crore houses under Pradhan Mantri Awas Yojana (Grameen) in the next five years.
Railways: Around 40,000 normal rail bogies will be converted to Vande Bharat to enhance the safety, convenience and comfort for passengers. Rail infrastructure pojects including the Metro Rail and Namo Bharat will be expanded to more cities.
Also, 3 major railway corridors were also announced - the port connectivity corridor, the energy, mineral and cement corridor and high traffic density corridor.
Other Areas:
MSMEs: Increased credit access and focus on ease of doing business. The Skill India Mission's initiative is to train 1.4 crore young individuals and reskilling of 54 lakh youth, coupled with the establishment of 3,000 new Industrial Training Institutes (ITIs).
Ayushman Bharat: All maternal and child healthcare schemes will be brought under one broad scheme.
Digitalisation: Emphasis on digital infrastructure and e-governance.
The interim budget provides stability and prepares the groundwork for the incoming government's full budget, which is expected to outline comprehensive economic strategies and reforms.
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