Interim Budget 2024: A‘Full’ Budget for Ballot

Redefining GDP

• Barring taxation issues, it looked like a full Union Budget
• FM terms GDP as Governance, Development and Performance
• Disinvestment target for FY25 is Rs50,000 cr
• Revised downwardly current fiscal’s target from Rs51,000 cr to Rs30,000 cr
• Buoyancy in revenue collections indicates robust economic activity
• GST collection was Rs1.65 lakh cr in Dec 2023
• For 2024-25, the total receipts other than borrowings and the total expenditure were Rs30.8 lakh cr and Rs47.66 lakh cr, respectively
• Tax receipts estimated at Rs26.02 lakh cr

New Delhi: In India, analysts and commentators use a term called ‘political Budget’ for the one presented before elections, for the objective of the incumbent government is to please voters rather than boost the economy. To that extent, what Finance Minister Nirmala Sitharaman presented on Thursday was a political Budget. However, it had nothing that could be called damaging in the long run.

The Interim Budget for 2024-25 was on expected lines, at least as expected by Bizz Buzz. With it, the Narendra Modi government has made its intentions of staying the course on economic policy clear that is, following the path of fiscal consolidation, infrastructure building, and targeted welfare measures.

Sitharaman increased the capital expenditure (capex) outlay by 11.1 per cent for 2024-25 to Rs1,111,111 crore; this amounts to 3.4 per cent of the gross domestic product (GDP). At the same time, she has pledged continuous decline in the fiscal deficit and support to better targeted welfare measures.

In fact, much of her Budget speech was political rhetoric, the message being her government’s concern for the weaker sections of society.

“As our Prime Minister firmly believes, we need to focus on four major castes. They are, ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth) and ‘Annadata’ (Farmer). Their needs, their aspirations, and their welfare are our highest priority.” With the pursuit of ‘Sabka ka Saath’ in the last 10 years, the government has assisted 25 crore people to get freedom from multidimensional poverty, she said.

“Direct benefit transfer of Rs34 lakh crore from the government using PM-Jan Dhan accounts has led to savings of Rs2.7 lakh crore for the government. This has been realized through avoidance of leakages prevalent earlier.”

The Finance Minister also mentioned PM-SVANidhi for street vendors, PM-JANMAN Yojana to the particularly vulnerable tribal groups, PM-Vishwakarma Yojana provides for artisans and craftspeople, the schemes for empowerment of the differently-abled and transgender persons, and PM-KISAN and PM FasalBima Yojana for farmers.

“Electronic National Agriculture Market has integrated 1,361 mandis, and is providing services to 1.8 crore farmers with trading volume of Rs3 lakh crore.”

She went on to redefine GDP, saying her government is focused on a more comprehensive GDP, i.e., Governance, Development and Performance.

For tech-savvy youth, a corpus of Rs1 lakh crore will be established with a 50-year interest-free loan, she said.

“The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates. This will encourage the private sector to scale up research and innovation significantly in sunrise domains. We need to have programmes that combine the powers of our youth and technology.”

For more capital expenditure, the Finance Minister announced the continuation of the scheme of 50-year interest free loan to states for another year with a total outlay of Rs1.3 lakh crore. Such a loan is also available for the promotion of tourism, she said.

Speaking to the media later, the Finance Minister said that, now that the government has done so much capital expenditure, the private sector would soon invest in a big way. While the last Interim Budget of 2019 had announced PM-Kisan and increased the standard deduction for salaried persons raised from Rs40,000 to Rs50,000, there was nothing for the middle class in terms of income tax.

Some relief was by way of improvement in procedures. The Interim Budget did away with the outstanding direct tax demands up to Rs25,000 pertaining to the period up to 2009-10, and up to Rs10,000 for 2010-11 to 2014-15. This, Sitharaman said, is expected to benefit about a crore tax payers. Salaried persons can now only hope for the full Budget for 2024-25 is a little more considerate for them.

She was happy with economic activity, which has enhanced buoyancy in revenue collections. The GST collection was Rs1.65 lakh crore in December 2023. For 2024-25, the total receipts other than borrowings and the total expenditure were Rs30.8 lakh and Rs47.66 lakh crore, respectively. The tax receipts are estimated at Rs26.02 lakh crore.

On the disinvestment front, though, the Finance Minister was not very bullish. She set the disinvestment target for 2024-25 at Rs50,000 crore, while downwardly revising the current fiscal’s target from Rs51,000 crore cut to Rs 30,000 crore.

On fiscal management, however, her performance looks impressive. The fiscal deficit has come down from 6.4 per cent in 2022-23 to 5.8 per cent, while the Budget estimate was 5.9 per cent. She has pegged it at 5.1 per cent for 2024-25.

In this period, the revenue deficit is expected to almost halve -from 3.9 per cent in 2022-23 to 2 per cent in 2024-25. In short, the Finance Minister has managed to maintain the growth momentum, while trying to present her government pro-poor.

Growth Formalisation:

• FM presented her 6th Budget in a row
• Equals the record of former PM Morarji Desai
• Rs47.66 lakh-cr Budget is 6% higher than FY24
• Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh cr
• It includes Rs23.24 lakh cr tax receipts
• Revenue receipts at Rs30.03 lakh cr expected to be higher than the BE
• Revised Estimate of fiscal deficit is 5.8% of GDP
• Nominal GDP growth for FY25 pegged at 10.5% against the 11% estimated earlier
• The nominal GDP for 2024-25 BE has been projected 10.5% growth at Rs3,27,71,808 crore
• Fiscal deficit for FY25 projected at 5.1%, lower than 5.8% this fiscal
• No change in direct, indirect tax rates
• Capex hiked 11% to Rs11.11 lakh cr
• Govt to borrow Rs14.13 lakh cr in next fiscal, lower than Rs15.43 lakh crore in 2023-24