Key Takeaways from Interim Budget (2024-25)

February 5, 2024

General Studies Paper -3

Context: Recently, the Union Finance Minister presented the Union Budget for the next financial year (2024-25) in the Parliament.

Budget at a Glance

– The Revised Estimate (RE) of the total receipts other than borrowings is Rs 27.56 lakh crore.
a. The RE of the total expenditure is Rs 44.90 lakh crore.
– The revenue receipts at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate (BE).
a. It reflects strong growth momentum and formalisation in the economy.
– It suggests that income tax revenues will account for 19%, Corporate tax will account for 17%, GST for 18% and borrowings for 28% of all government resources in FY25.
Rupee come from:
– Borrowings and other liabilities account for the largest avenue from where the Budget money comes, followed by income tax and GST and other taxes.
Rupee goes to:
– When it comes to expenditure, the highest amount goes towards paying interest and the money given to the states in the form of taxes and duties, accounting for 20% each of the total expenditure.

Gross and Net Borrowings for 2024-25:
– These are estimated to be lower than the current financial year 2023-24.
– These aim to make available larger credit for the private sector, which is seen to making investments at scale now.

Key Takeaways in the Budget

Capital Expenditure (2024-25):

It was raised to ₹11.1 lakh crore for FY25 from the ₹9.5 lakh crore in the previous fiscal.
This would be4% of the GDP.
The proportion of capital expenditure (excluding grant in aid) to total expenditure stands at 23.31%.
In 2024-25, the total expenditure is estimated at ₹47.66 lakh crore, a 6.1% increase over the revised estimates of 2023-24.

Fiscal Prudence:

The budget estimates for the fiscal deficit for FY 25 was pegged at 5.1%, down from the revised estimates of 5.8% last fiscal year.

Achievement of Taxation Reform:

Direct Taxes:
Direct tax collections have more than tripled in the last ten years, with return filers increasing by 2.4 times.
Reduction and rationalisation of tax rates implemented:
No tax liability for income up to Rs 7 lakh under the new tax scheme, increased from Rs 2.2 lakh in FY 2013-14.
Introduction of Faceless Assessment and Appeal for greater efficiency and transparency.
Indirect Taxes:
GST unified the indirect tax regime, reducing compliance burdens.
GST transition viewed positively by 94% of industry leaders; 80% reported supply chain optimization.
GST tax base more than doubled; average monthly gross GST collection nearly doubled to Rs 1.66 lakh crore.
States benefited from SGST revenue, showing a higher tax buoyancy post-GST.
Customs:Import release time significantly reduced at Inland Container Depots, air cargo complexes, and sea ports.

State-wise Allocation of Central Taxes and Duties:

Allocation to Ministries:

The Union Budget allocated a massive ₹6.21 lakh crore for the Defence Ministry, followed by Road Transport & Highways with ₹2.78 lakh crore and Railways with ₹2.55 lakh crore.

For Example:

Education budget for 2024-25 seen at Rs 1.25 lakh crore, 14.5% higher than revised estimate of Rs 1.1 lakh crore for 2023-24.
Housing: New housing plan for the middle class; 2 crore houses to be built under PM Aavas Yojana; Pradhan Mantri Awas Yojana (Grameen)close to achieving target of 3 crore houses, additional 2 crore targeted for next 5 years.
Agriculture: Investment in post-harvest activity by both private and public sector support; Empowering dairy farmers; More efforts to control Foot and mouth disease; Application of Nano-DAP to be expanded in all agro-climatic zones; Crop insurance has been given to 4 crore farmers under PM Fasal Bima Yojana; Five integrated Aqua Park to be set up; Blue Economy 2.0 to promote aquaculture; Implementation of Pradhan Mantri Matsaya Sampada Yojana; and Direct financial assistance to 11.8 crore farmers under PM-KISAN.
Renewable energy:Viability gap funding for wind energy; Setting up of coal gasification and liquefaction capacity; Phased mandatory blending of CNG, PNG and compressed biogas; Financial assistance for procurement of biomass aggregation machinery; 1 crore households will be enabled to obtain up to 300 units of free electricity per month.

Health Expenditure:

The expenditure for the Department of Health & Family Welfare for FY25 is Rs. 10,000 crores more than the revised estimates of the current FY.
But the allocation to the Union Ministry of Health is estimated to be 1.9% of the total expenditure, continuing the trend of staying below the 2% mark from 2022-23.
Healthcare facilities under Ayushman Bharat will be extended to all Asha workers, Aanganwadi workers.
Vaccination of 9-14 year old girls for cervical cancer
Saksham Anganwadi and Poshan 2.0to be expedited for improved nutrition delivery, early childhood care and development

Railway Budget in a Glance:

Railway projects have been identified under the PM Gati Shakti Yojana for enabling multi-modal connectivity.
It aims to ‘improve logistics efficiency and reduce costs’.
Railway Infrastructure: To expand India’s railway infrastructure, three major railway economic corridors were announced.
These include an energy, mineral and cement corridor, a port connectivity corridor and a high traffic density corridor.
It emphasised that these corridors, along with dedicated freight corridors, aim to accelerate the country’s GDP and reduce logistic costs.
Additionally, there will be 40,000 normal train bogies to be converted into high-speed Vande Bharat ones.

Conclusion:

The Interim Budget is a temporary budget that is presented by the government in an election year. It ranged from railways, tourism, healthcare, technology, aviation, green energy, aquaculture, housing, etc.
However, the new government will present its full budget after the newly elected Lok Sabha, outlining the government’s financial roadmap for the entire fiscal year.