Highlights of Union Budget 2024: Budget 2024 Key Highlights
The Interim Union Budget for the financial year 2024-25 was tabled in the Parliament by Finance Minister Nirmala Sitharaman earlier today. This was the sixth budget presented by the current FM and the last one of Prime Minister Narendra Modi-led government’s second term.
The budget focused on fiscal consolidation, infra, agri, green growth, and railways. However, no changes were made in the tax rates, which was a disappointment to salaried individuals.
The Fiscal Deficit target for FY25 was set at 5.1 percent of the GDP, better than expected, while the FY24 target was also revised down to 5.8 percent. Meanwhile, the capex target of FY25 was increased by 11.1 percent to ₹11.1 lakh crore.
“The Indian economy has witnessed a positive transformation in the last 10 years. People are looking towards the future with hope. In 2014, the country was facing enormous challenges. With Sabka Saath, Sabka Vikaas, the Narendra Modi-led government overcame those challenges,” said Finance Minister Sitharaman in her budget speech.
The next 5 years will be years of unprecedented development and to realise the goal of becoming a developed country by 2047, Sitharaman stated. She added that the “trinity of democracy, demography and diversity can fulfill aspirations of every Indian”.
Experts also believe that this budget fulfilled their expectations.
“The FM has continued to focus on strengthening of domestic macro factors including sustained investments in Infra, Agriculture, Domestic Tourism, and also sticking to fiscal responsibility with a lower fiscal deficit which could be music to the ears of foreign investors and impending $25 billion bond inclusion in June as lower budget deficits and pared borrowings will help bring down yields. It could possibly open the door for a ratings upgrade,” said Pradeep Gupta, Co-founder & Vice-chairman, Anand Rathi Group.
Key features of the budget are a focus on infrastructure, tourism, logistics, and innovation in research. All these measures will bring continuous sustainable growth to the economy. This shows the continued commitment of the existing government to move towards bringing fiscal prudence and reaching the targeted fiscal deficit of 4.5 percent of GDP by FY26, Gupta added.
From income tax to green energy and tourism, let’s take a look at the 14 key highlights of the 2024 Budget:
Income Tax
“…I do not propose any changes in tax rates in direct and indirect taxes including import duties,” Sitharaman said, during her Budget speech.
While no changes were seen in the tax regime in this budget, the FM announced that over the last 10 years, tax collections have more than doubled. She also pointed out that the average processing time of tax returns was reduced to 10 days this year.
“The Finance Minister reports a significant milestone, citing a doubling of tax collections over the past decade. Notably, the current budget maintains the status quo in both direct and indirect taxation, including import duties. Companies may find this predictability beneficial in navigating their financial planning, fostering a more secure and sustainable business environment,” said Siddhesh Mehta, Research Analyst, Samco Securities.
Infrastructure Development
Building on the massive tripling of the capital expenditure outlay in the past 4 years resulting in a huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 percent to 11.11 lakh crore, announced the FM. This is 3.4 percent of the GDP.
Railways
FM Sitharaman announced that 40,000 normal rail bogies will be converted to Vande Bharat to enhance the safety, convenience, and comfort of passengers. Key rail infrastructure projects including 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 the high traffic density corridor.
The resultant decongestion of the high-traffic corridors will also help in improving the operations of passenger trains, resulting in safety and higher travel speed for passengers.
Together with dedicated freight corridors, these three economic corridor programs will accelerate our GDP growth and reduce logistic costs, said Sitharaman.
“After the success of Vande Bharat trains, the FM announced around 40,000 more rail bogies will be converted to Vande Bharat coaches. This will further create job opportunities while reducing travel time as well as increasing tourism across the country,” said Sanjay Moorjani, Research Analyst at SAMCO Securities.
Meanwhile CRISIL noted that the development of commodity-specific economic rail corridors can de-congest existing lines, mostly in the eastern part of the country. This is supportive of faster freight movement and turnaround times and should help reduce the logistics cost for India from 12 percent of GDP, improving competitiveness, especially manufacturing, against peers.
‘Lakhpati Didi’ Scheme
FM announced that eighty-three lakh SHGs (self-help groups) with nine crore women are transforming the rural socio-economic landscape with empowerment and self-reliance. Their success has assisted nearly one crore women to become ‘Lakhpati Didi’ already. Buoyed by the success, it has been decided to enhance the target for ‘Lakhpati Didi’ from 2 crore to 3 crore.
“The Lakhpati Didi Scheme, aiming to empower two crore women in villages, has achieved notable success by reaching 83 lakh self-help groups and benefiting 9 crore women. With a financial injection of ₹1 lakh per household for one crore beneficiaries, this initiative is poised to significantly uplift the economic status of rural women. This empowerment not only stimulates the rural economy but also enhances credit demand for micro-financiers, particularly from women and self-help groups, potentially reducing stress on asset quality issues,” said Veer Trivedi, Research Analyst, SAMCO Securities.
Electricity
Through roof-top solarisation, 10 million households will be enabled to obtain up to 300 units of free electricity every month. This scheme follows the resolve of the Prime Minister on the historic day of the consecration of Shri Ram Mandir in Ayodhya, said FM Nirmala Sitharaman. This will help save up to ₹15,000-18,000 annually for households from free solar electricity and selling the surplus to the distribution companies, noted Sitharaman.
Green Energy
Towards meeting the commitment to ‘net zero’ by 2070, the following measures were announced.
a. Viability gap funding will be provided for harnessing offshore wind energy potential for the initial capacity of one giga-watt.
b. Coal gasification and liquefaction capacity of 100 MT will be set up by 2030. This will also help in reducing imports of natural gas, methanol, and ammonia.
c. Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be mandated.
d. Financial assistance will be provided for procurement of biomass aggregation machinery to support collection.
Electric vehicles
The government will expand and strengthen the EV ecosystem by supporting manufacturing and charging infrastructure, the finance minister said. Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanisms, she added.
“In addressing the key barrier to EV and hybrid vehicle adoption – the shortage of public charging stations, evident from the 6,586 stations recorded by March 2023 – the Indian government’s 2024-25 Union Budget presents a forward-thinking strategy. It aims to incentivise and substantially expand the electric vehicle ecosystem, with a focused investment in boosting the number of charging stations. This initiative is a cornerstone in transforming India’s EV landscape, overcoming range anxiety, and promoting electric vehicles as a viable, sustainable transport solution for the future,” said Kartik Narayan, CEO at Staffing, TeamLease Services.
Tourism
FM announced that states will be encouraged to take up comprehensive development of iconic tourist centers’ branding and marketing at a global scale. A rating system based on the quality of facilities and services will be established. Long-term interest-free loans will be provided to states for financing these developments. Projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. This will help in generating employment as well, says FM Sitharaman.
Promoting investments
The FDI inflow during 2014-23 was $596 billion marking a golden era. That is twice the inflow during 2005-14. For encouraging sustained foreign investment, the government is negotiating bilateral investment treaties with foreign partners, in the spirit of ‘first develop India’, said FM in her speech.
Technology
New-age technologies and data are changing the lives of people and businesses. They are also enabling new economic opportunities and facilitating the provision of high-quality services at affordable prices for all, including those at the ‘bottom of the pyramid’, said FM Sitharaman.
She announced a corpus of rupees one lakh crore will be established with a fifty-year interest-free loan. 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 programs that combine the powers of our youth and technology,” she said.
A new scheme will be launched for strengthening deep-tech technologies for defence purposes and expediting ‘atmanirbharta’, added the FM.
“The 50-year interest-free loan for a corpus of Rs. 1 lakh crore can be seen as an indispensable boon for the IT industry and sunrise sectors. We can expect the funding to bolster research and innovations, thereby improving India’s position as a global technology leader in the coming decade,” said Manick Wadhwa, Director at SKI Capital.
Ayushman Bharat
Ayushman Bharat cover will be extended to all Anganwadi and Asha workers, Finance Minister Sitharaman announced. She also added that all maternal and child healthcare schemes will be brought under one comprehensive scheme.
PM Awas Yojana
Despite the challenges due to COVID, implementation of PM Awas Yojana (Grameen) continued and the centre is close to achieving the target of three crore houses. Two crore more houses will be taken up in the next five years to meet the requirement arising from the increase in the number of families, said Sitharaman.
“Launched on June 25, 2015, the Pradhan Mantri Awas Yojana (Urban) Mission seeks to ensure housing for all. The government aimed to construct 3 crore pucca houses by March 2024, the finance minister stated in the speech that they are closer to achieving this goal. An additional plan to build 2 crores more houses over the next five years signals sustained commitment. This intensified focus on PMAY is expected to trigger increased investments and heightened activity in the construction sector, with multiplier effects on Housing Finance, Cement, Steel, and Paints industries, reflecting a significant positive impact across various sectors,” said Veer Trivedi, Research Analyst, SAMCO Securities.
MSME
Policy priority is to provide training for MSMEs to compete globally and facilitating their growth will be important. To meet the investment needs, the government will prepare the financial sector, said FM Sitharaman.
“The Skill India Mission’s initiative to train 1.4 crore young individuals, along with the upskilling and re-skilling of 54 lakh youth, coupled with the establishment of 3,000 new Industrial Training Institutes (ITIs), is a vital step towards bolstering the PLI and Make in India programs. This comprehensive approach is essential in enhancing the manufacturing sector’s contribution to the GDP from 17 percent to 25 percent by 2047, thereby creating numerous job opportunities,” said Kartik Narayan, CEO, Staffing at TeamLease Services.
Agriculture and food processing
FM announced that the efforts for value addition in the agricultural sector and boosting farmers’ income will be stepped up. Pradhan Mantri Kisan Sampada Yojana has benefitted 38 lakh farmers and generated 10 lakh employment. Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has assisted 2.4 lakh SHGs and sixty thousand individuals with credit linkages. Other schemes are complementing the efforts for reducing postharvest losses and improving productivity and incomes.
To ensure faster growth of the sector, the government will further promote private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing, and marketing and branding, she added.
Fiscal deficit and other key numbers
– FY25 fiscal deficit target at 5.1 percent of GDP.
– FY24 fiscal deficit target was revised down to 5.8 percent of GDP from 5.9 percent earlier.
– Fiscal deficit for the first nine months of FY24 till December stood at ₹9.82 lakh crore or 55 percent of annual estimates.
– FY25 capital expenditure set at ₹11.1 lakh crore, up 11.1 percent.
– FY25 total expenditure expected at ₹30.80 lakh crore. The revised estimate of the total expenditure for FY24 is ₹44.90 lakh crore.
– The revenue receipts for FY24 at ₹30.03 lakh crore are expected to be higher than the Budget estimate, reflecting strong growth momentum and formalisation in the economy.
– FY25 gross market borrowing pegged at ₹14.13 lakh crore, net borrowing at ₹11.75 lakh crore.
– FY25 gross tax receipt target at ₹26.02 lakh crore.
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