On February 1, 2024, Union Finance Minister Nirmala Sitharaman unveiled the Interim Budget for India, outlining the government's financial plan for the upcoming fiscal year. The presentation of the interim budget holds significance as it provides a snapshot of the economic priorities and allocation of resources, offering insights into the administration's strategies to address various challenges and promote growth.
Understanding Budget
A budget, in general, serves as a comprehensive financial plan that outlines the government's estimated revenues and proposed expenditures for a specific period, typically a fiscal year. It serves as a crucial tool for economic governance, helping to allocate resources efficiently, manage public finances, and foster economic development. The budgetary process involves forecasting revenue sources, determining expenditure priorities, and striking a balance to ensure fiscal sustainability.
Understanding Interim Budget
An interim budget, on the other hand, is a unique financial document presented by the government when it is in the last year of its term. Also known as a vote-on-account, an interim budget is designed to meet the financial requirements for a short duration until the new government, elected through democratic processes, can present a full-fledged budget. The primary objective of an interim budget is to maintain the continuity of essential government functions and avoid a financial vacuum during the transition period.
Let's delve deeper to grasp the key features of this budget.
Inclusivity
The Finance Minister in her budget speech highlighted the importance of ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas’ and defined its meaning. These are:
Social inclusivity through coverage of all strata of society, and
Geographical inclusivity through the development of all regions of the country.
Preventing Subsidy Leakage
The Finance Minister has highlighted that the government saved Rs. 2.7 lakh crore subsidy leakage for the Government with the help of ‘Direct Benefit Transfer’.
The government in last Fiscal year provided a subsidy of Rs. 34 lakh crore from the Government by using PM-Jan Dhan accounts.
These funds have been diverted for other purposes of social welfare.
Credit Disbursal through the Svanidhi Scheme
In the last fiscal year, PM-SVANidhi has provided credit assistance to 78 lakh street vendors out of which 2.3 lakh vendors have received credit for the third time.
Agriculture Sector
The Budget has highlighted that direct financial assistance has been provided to 11.8 crore farmers under the PM-Kisan Samman Yojana including marginal and small farmers.
Crop insurance has been given to 4 crore farmers under PM Fasal Bima Yojana.
1361 Mandis has been integrated under the Electronic National Agriculture Market (E-NAM).
These Mandis provide services to 1.8 crore farmers with a trading volume of Rs. 3 lakh crore.
Nano DAP
The budget provided for the introduction and application of Nano DAP on various crops will be expanded in all agro-climatic zones. It will be implemented on the lines with nano-urea.
Atmanirbhar Oil Seeds Abhiyan
In order to achieve ‘Atmanirbharta’ or self-reliance for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower, this scheme has been provided in the budget.
It will cover research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance.
Dairy Development
The budget has provided for the formulation of a comprehensive programme for supporting dairy farmers
It will be built on the success of existing schemes such Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry.
Fisheries sector
The budget has provided for the setting up of Five integrated aquaparks.
It has also provided for stepping up of implementation of the Pradhan Mantri Matsya Sampada Yojana (PMMSY) in order to:
Enhance aquaculture productivity from existing 3 to 5 tons per hectare
Double exports to Rs. 1 lakh crore and
Generate 55 lakh employment opportunities in the near future.
Youth Empowerment
The finance minister referred to the youths of our country as ‘Amrit Peedhi’.
According to the Finance Minister, the Skill India Mission has trained 1.4 crore youth and upskilled and reskilled 54 lakh youth.
Further government has established 3000 new ITIs, 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS and 390 universities for their inclusive development.
According to the budget, PM Mudra Yojana has sanctioned 43 crore loans aggregating to Rs. 22.5 lakh crore for the entrepreneurial aspirations of our youth.
Apart from this, Fund of Funds, Start-Up India, and Start-Up Credit Guarantee schemes are also assisting youth to become entrepreneurs.
Women Empowerment
The budget has highlighted that Thirty crore Mudra Yojana loans have been given to women entrepreneurs.
There has been an increase in Female enrolment in higher education by twenty-eight per cent in ten years.
Girls and women have now forty-three percent of enrolment in STEM courses which is one of the highest in the world.
The budget has highlighted the achievements of the government in the form of the ‘Triple Talaq’ Bill, the reservation of one-third of seats for women in the Lok Sabha and State legislative assemblies as its achievement.
She also highlighted that over seventy per cent of houses under PM Awas Yojana in rural areas have been given to women.
New announcements
Cervical Cancer Vaccination: The government has announced vaccination for girls in the age group of 9 to 14 years for the prevention of cervical cancer.
The budget provided for the upgradation of Anganwadi Centres under “Saksham Anganwadi” and “Poshan 2.0”.
It will help in improved nutrition delivery, early childhood care, and development.
Lakhpati Didi
The budget highlighted the role of Eighty-three lakh SHGs with nine crore women who are transforming the rural socio-economic landscape with empowerment and self-reliance.
It has assisted nearly one crore women to become Lakhpati Didi already.
Hence, the budget has been upgraded to enhance the target for Lakhpati Didi from 2 crore to 3 crore.
Health
The budget has provided for a newly designed U-WIN platform for managing immunization and intensified efforts of Mission Indradhanush.
It has also added that Ayushman Bharat Healthcare coverage under the Ayushman Bharat scheme will be extended to all ASHA workers, Anganwadi Workers and Helpers.
Infrastructure
The budget has provided for an increment in the capital expenditure by 11.1 percent to eleven lakh, eleven thousand, one hundred and eleven crore rupees. It will constitute 3.4 percent of the GDP.
Railways
The budget has provided for the implementation of three economic railway corridor programs. These are:
1. Energy, mineral, and cement corridors,
2. Port connectivity corridors, and
3. High-traffic density corridors.
These projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity.
The budget has provided for the conversion of Forty thousand normal rail bogies to the Vande Bharat standards to enhance the safety, convenience and comfort of passengers.
Aviation Sector
In the past ten years. the number of airports has doubled to 149.
Air connectivity to tier-two and tier-three cities under the UDAN scheme has been improved.
In the last ten years, five hundred and seventeen new routes are carrying 1.3 crore passengers.
The budget has further provided for the expansion of the airport connectivity.
Green Energy Infrastructure
The budget has highlighted the commitment to meet ‘net zero’ by 2070. It has provided for the following to achieve this target.
Viability gap funding for harnessing offshore wind energy potential for the initial capacity of one Giga-watt.
A 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.
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.
Financial assistance for the procurement of biomass aggregation machinery to support collection has been announced.
Rooftop Solarization
The scheme has provided for rooftop solarization in which one crore households will be enabled to obtain up to 300 units of free electricity every month.
It will save up to fifteen to eighteen thousand rupees annually for households from free solar electricity and selling the surplus to the distribution companies
It will enable the charging of electric vehicles;
It will provide entrepreneurship opportunities for a large number of vendors for supply and installation.
It will provide employment opportunities for the youth with technical skills in manufacturing, installation and maintenance.
Electric Vehicle Ecosystem
The budget has provided for supporting the e-vehicle ecosystem by supporting manufacturing and charging infrastructure.
It also provided for greater adoption of e-buses for public transport networks through payment security mechanisms.
Fund for R&D in Sunrise Industries
The budget has announced a corpus of rupees one lakh crore to be established with a fifty-year interest-free loan.
It will provide long-term financing or refinancing with long tenors and low or nil interest rates for R&D.
It aims to scale up research and innovation significantly in sunrise domains.
Deep-tech Technologies
The budget has provided for a new scheme to strengthen deep-tech technologies for defence purposes and expediting ‘Atmanirbharta’.
Industry
Bio-manufacturing and Bio-foundry Scheme
The budget has been provided for this scheme for the Biodegradable Polymers manufacturing.
It aims to promote green growth. It will provide environment-friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals and bio-agri-inputs.
This scheme will also help in transforming today’s consumptive manufacturing paradigm to one based on regenerative principles.
Blue Economy 2.0
The budget provides for a scheme to promote climate-resilient activities for Blue Economy 2.0. It is a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with an integrated and multi-sectoral approach.
Tourism
The budget has provided for taking up the comprehensive development of iconic tourist centers, branding and marketing them at a global scale by the state government.
It also provides a framework for rating the centers based on the quality of facilities and services.
It provides states with long-term interest-free loans for financing such development on a matching basis.
It also provides to address the emerging fervor for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities for Indian islands, including Lakshadweep.
Macro-economic Analysis
Transformative Impact of Tax Reforms
Direct tax collections have more than tripled over the past decade, marking a significant fiscal transformation.
The taxpayer base has expanded substantially, witnessing a 2.4-fold increase in the number of return filers.
Efficient refund processes have been implemented, reducing the average processing time from 93 days (2013-14) to just 10 days (2023-24), ensuring faster refunds for taxpayers.
Consumers have reaped benefits with reduced logistics costs, contributing to lower prices for a wide array of goods and services.
Monthly Gross GST collections have experienced a remarkable doubling, reaching ₹1.66 lakh crore in FY24, reflecting the success of Goods and Services Tax (GST) implementation.
The tax buoyancy of State revenue has seen a noteworthy increase from 0.72 (2012-16) to 1.22 in the post-GST period (2017-23), indicating improved fiscal health.
Import processes have been streamlined, with a notable decline in release times, including a 47% reduction at Inland Container Depots, a 28% decrease at Air Cargo complexes, and a 27% drop at Sea Ports.
Key Tax Proposals
Tax Benefits for Start-ups and Investments:
Certain tax benefits extended to Start-ups and investments made by sovereign wealth funds/pension funds.
Tax exemption for specific IFSC units, earlier set to expire on 31.03.2024, extended until 31.03.2025.
Withdrawal of Outstanding Direct Tax Demand:
Outstanding direct tax demands up to ₹25,000 pertaining to FY10 and up to ₹10,000 for FY11-FY15 are withdrawn.
Expected to bring relief to approximately 1 crore taxpayers.
Retention of Uniform Tax Rates:
Continuation of the same tax rates for both direct and indirect taxes, including import duties.
Corporate Taxes to remain at 22% for existing domestic companies and 15% for specific new manufacturing companies.
No tax liability for taxpayers with income up to ₹7 lakh under the new tax regime, ensuring consistency and predictability in the tax structure.
Ministry wise Allocation
Source: India Budget
Note for UPSC Aspirants: For UPSC aspirants interested in exploring further, here are some keywords to guide your research: Direct Benefit Transfer, PM-Jan Dhan, Svanidhi Scheme, Electronic National Agriculture Market (E-NAM, PM-Kisan Samman Yojana, PM Fasal Bima Yojana, Skill India Mission, PM Mudra Yojana, Cervical Cancer, U-WIN platform, Mission Indradhanush, Ayushman Bharat scheme, PM Awas Yojana, PM Gati Shakti, Blue Economy.
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