• Tuesday, March 05, 2024


India’s interim budget 2024: The positives & not so positives

It seems that the budget is built on four foundations: poor, women, farmers, and young.

Indian prime minister Narendra Modi speaks on the interim Union Budget 2024, in New Delhi on Thursday, February 1, 2024. (ANI Photo)

By: Prof Dr Prem Lal Joshi

INDIA’S interim budget of 2024 was anticipated to be pro-investment with a focus on enhancing ease of doing business and luring foreign direct investment, keeping in mind the objective of Indian financial growth. This is crucial because, in the next five years, India wants to grow its economy to $7 trillion (£5.5 trillion) and rank third in the world. Its finance minister Nirmala Sitharaman, while presenting the budget in the parliament on Thursday (1), mentioned a number of welfare schemes as well as development projects to be started for rapid economic growth.

It seems that the budget is built on four foundations: poor, women, farmers, and young.

The main features and some implications of the budget, the final one of the outgoing government, are as follows:

The positives:

· The first response to the interim budget is a consolidation of the fiscal deficit, with a target of 5.1 per cent. This is undoubtedly a major advancement and the fiscal deficit has been well controlled in the budget.

Read: India will see unprecedented rise in 5 years: Finance minister in interim budget

· GDP for 2024-25 will increase by 8.5 per cent

· The effects of more than Rs 11 lakh crore (£105 billion) rise in capital spending on development will be extensive.

· Tax contributions will be 26.02 lakh crore (£248 billion).

Read: Lakshadweep tourism to be developed in big way: Sitharaman in interim budget

· Income tax returns increased by 2.4 times. Direct income tax collections increased three fold in the last 10 years.

· The stock market did not respond to this budget, indicating that the capital market is unaffected by it, but the market did not decline today either.

· It is claimed that people’s income has increased by 50 per cent in tandem with GDP growth, which is a positive factor.

· The nation’s Goods and Services Tax collections more than doubled.

· The budget suggested providing 300 free electricity units to low-income families.

· The defence budget grew by 11.1%, which is excellent and will lead to more self-reliance in defence equipment and munitions under the ‘Make in India’ campaign.

· 250 million people will rise above the poverty line in the next ten years as targeted in this budget.

· Increasing funding for the development of connectivity and infrastructure will boost the economy and increase tourism-related income. Cities and smaller communities will be connected by Vande Bharat trains.

Additionally, this will lead to an increase in job opportunities. In the 2024–2025 budget, India plans to spend more than $134 billion (£106 billion) on infrastructure.

· Three major economic railway corridor programs will be implemented under PM Gati Shakti.

· There is significant assistance for income tax payers who have contested payment arrears since, between 2009 and 2010, a pardon of Rs 25,000 (£239) is given, and between 2010 and 2015, a pardon of Rs 10,000 (£95) is given.

It means that disputes over past-due income taxes are dropped. It implies that the government is focusing on facilitating trade and investment for common people. Roughly ten million taxpayers are expected to benefit from these reliefs.

· A greater emphasis will be placed on air connections to support national tourism. The country will see an increase in spiritual tourism.

· Rs 1 lakh crore corpus and a sizable interest-free outlay will propel India to the forefront of innovation and skill development.

· “Jai Jawan,” “jai kishan,” “jai Vigyan,” and now “Jai Anusandhan” are the new taglines. It means more emphasis on research and developement, particularly in pharmaceutical and IT sectors.

· A plan to give 5.5 million fishermen jobs

· Female empowerment has been focused more than 30 million new ‘lakhpati’ (millionaire) Didi (elder sister) are targeted.

· Under the Pradhan Mantri Awas Yojana (PMAY), 20 million homes will be built over the course of the next five years for low income people.

The green-energy sector hails this interim budget. It looks that the budget largely addresses the needs of the underprivileged, young people, women’s empowerment, and farmers’ welfare.

The disappointments:

· No relief in direct income tax rates and limits and in indirect tax rates. Only under the new regime, the limit is increased to Rs 7 lakh (6,679). However, incentives are not enough to switch to new tax regime, in views of several experts.

· No measures in the direction of banking reforms

· No incentives for senior citizens

· There seems not much emphasis on structural reforms in the economy.

· There is not much in this budget for the common men since they are still struggling and inflation is rising

· The opposition stated, “This is the last budget for the BJP (Bharatiya Janata Party). Where is the budget?” Was there any fresh information released? While the leaders of the ruling party described it as a creative and inclusive budget.

· A lot of specialists do not consider this budget to be populist.

The budget is presented in the election year and Modi’s BJP seems to be very confident to come to power in the third straight term based on its recent achievements, particularly by meeting the aspirations of millions of Indian people by building the long pending issue of Ram Temple in Ayodhya.

In the budget, there are not many chocolate gifting boxes to attract the voters; rather this budget looks somewhat growth-oriented but little money for the middle class, the elderly, and the general public.

For senior people, the standard deductions should have been raised from Rs 50,000 (£477) to Rs 100,000 (£954) in the budget at least, according to my interpretations and responses.

As the budget was brief and straightforward, like a jingle, an eight out of 10 is how I would rank this budget this year.

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