10 Insights from the Interim Budget 2024

Today, Feb 1 2024, the Finance Minister Nirmala Sitharaman presented the Interim Budget 2024-2025. Despite political compulsion, considering that the elections are upcoming, the interim budget still does not succumb to fiscal irresponsibility and stands by the ruling party’s promise of a Viksit Bharat. Here is some of the information we could gather. ? ?

1. The tax slabs will remain the same from 2024. This affects both direct taxes as well as import duties. This means that there are no major changes for tax payers in the interim budget. It is interesting to note that the number of tax payers has gone up to almost double of what it was in FY14 as shown in the above figure.??

2. The government has highlighted that social justice is its main goal. The budget aims to support the four groups, poor, women, youth and farmers, whom the FM referred to as Annadatas. The Lakhpati Didi scheme, which empowers women in self-help groups to earn at least 1 Lakh per annum, has been a resounding success and the FM said that the beneficiary target would go up from 2 crores to 3 crores. The healthcare cover under Ayushman Bharat Scheme will be extended to all ASHA workers, Anganwadi workers and helpers.?

3. The central expenditure growth is the highest in the past three fiscal years. Total expenditure exceeds 45 crores, nearly twice that of the expenditure 4 years back. But it is now only 15.4% of the GDP, a two percent drop from 17.7% over the past two years. The fiscal deficit target has been set at 5.1% for FY2025, which is still lower than that for FY2024. The net borrowing for the government is Rs. 11.75 lakh crore, which is still lower than that in FY2024.?

4. Attracting foreign investment with better infrastructure. There is an increase of 11.1% in capital outlay focusing on infra development to attract foreign investment. The FM also made it clear that she expects foreign companies to First Develop India (FDI) as they also gain.?

5. Improvements in railways. 40,000 rail bogies will be converted to Vande Bharat standards. Airports will be doubled to 149. Indian carrier companies have placed order for 1000 new aircraft. The government will implement three major economic railway corridors – energy, mineral and cement corridors; port connectivity corridors; and high traffic density corridors. This will decongest the high-traffic corridors, which will help in improving the travel speed and operational safety of passenger trains.?

6. New homes for low-income households. Provisions will also be made for those living in rented homes or slums to acquire a new home. The government will also build 2 crores more homes for the rural poor under the PM Awas Yojana (Grameen).?

7. More interest-free loans to drive innovation. 50-year interest free loans will be established with a corpus of 1 lakh crore to be provided to startups to drive research and innovation. All previous tax and other benefits provided to startups will continue to exist and greatly benefit the startup ecosystem, all contributing to the growth of Viksit Bharat.?

8. Defence spending to go up. Defence spending will account for 8% of the total expenditure, at Rs. 6.2 lakh crore more than the previous year, and it will mainly be focused on developing deep tech for the defence sector.??

9. The FM also said that the centre is looking at improving the amenities to improve tourism in places like Lakshadweep. It is also trying to improve port connectivity and tourism infrastructure in such places.??

10. India is also growing richer. The per capita GDP in 2023 was grew 7.9% to a new high of 2.12 lakh and it is more than double of that in FY14. The higher number of tax payers we shared in a separate screenshot also attests to this.??

Expert speaks?

According to Guarav Dua, “The budget is very good for pharma, IT and PSU banks, though a lot of sectors will benefit from it. Investors should try and focus on capital (banks, financials), CAPEX (engineering, real estate and infra) and consumer (auto, hotel, and tourism). He also added that it is good to see that the budget stays fiscally responsible despite promising more of the benefits from the previous year.?

Conclusion?

All in all, the budget is an outline for a more prosperous nation or Viksit Bharat. The Union Defence Minister added to this optimism saying, “It is a blueprint for a confident, strong and self-reliant Viksit Bharat”. The budget becomes a strong support for the party’s national election campaign only a few months away now and also becomes a blueprint for tomorrow’s developed and resilient India. Let us hope that the graphs in the interim budget of 2025 project an even higher growth for our nation.?