Jammu, Feb 1: Ahead of general elections, the Union Finance Minister Nirmala Sitharaman Thursday presented an interim budget or the Vote on Account (VoA), (for a part of) the financial year 2024-25, proposing a record hiked capital expenditure of Rs 11.11 Cr and leaving tax structure broadly untouched.
For the Financial Year 2024-25, the total receipts other than borrowings and the total expenditure are estimated at Rs 30.80 and 47.66 lakh Cr respectively. The tax receipts are estimated at Rs 26.02 lakh Cr. Nominal GDP growth for the next financial year has been pegged at 10.5 percent against the 11 percent estimated earlier while the fiscal deficit in 2024-25 is estimated to be 5.1 percent of GDP.
This was her sixth straight budget (though interim), a record earlier held by only the former Prime Minister Morarji Desai.
The budget, described as “innovative, inclusive encompassing public-centric development”, mainly focussed on four “major castes”, as earlier spelt out by the Prime Minister Narendra Modi, - Poor, youth, farmers and women.
FOUR MAIN “CASTES” FOCUS AREAS
Sitharaman said that the Prime Minister Narendra Modi firmly believed and focused on four major castes. “They are poor, women, youth and ‘Annadata’ i.e., farmers. “Their needs, their aspirations, and their welfare are the government's highest priority, because the country progresses, when they progress,” she said.
She elaborated that this government’s humane and inclusive approach to development was a marked and deliberate departure from the earlier approach of ‘provisioning up-to-village level.’
Detailing about measures for the poor, she said that with the pursuit of ‘Sabka ka Saath’ in these 10 years, the government assisted 25 Cr people to get freedom from multidimensional poverty.
FOR POOR’S WELFARE
She pointed out that ‘Direct Benefit Transfer’ of Rs 34 lakh Cr from the government using PM-Jan Dhan accounts led to savings of Rs 2.7 lakh Cr for the government. “The savings have helped in providing more funds for ‘Garib Kalyan’. PM-SVANidhi has provided credit assistance to 78 lakh street vendors. From that total, 2.3 lakh have received credit for the third time. PM-JANMAN Yojana reaches out to the particularly vulnerable tribal groups, who have remained outside the realm of development so far. PM-Vishwakarma Yojana provides end-to-end support to artisans and craftspeople engaged in 18 trades. The schemes for empowerment of Divyangs and Transgender persons reflect the firm resolve of our government to leave no one behind.
MEASURES FOR FARMERS
With regard to farmers, she said that every year, under PM-Kisan Samman Yojana, direct financial assistance is provided to 11.8 Cr farmers, including marginal and small farmers. “Crop insurance is given to 4 crore farmers under PM Fasal Bima Yojana. These, besides several other programmes, are assisting ‘Annadata’ in producing food for the country and the world. Electronic National Agriculture Market has integrated 1361 mandis, and is providing services to 1.8 Cr farmers with trading volume of Rs 3 lakh crore. These are facilitated from farmer-centric policies, income support, coverage of risks through price and insurance support, promotion of technologies and innovations through start-ups.
The Finance Minister said that the country’s prosperity depended on adequately equipping and empowering the youth.
“The National Education Policy 2020 is ushering in transformational reforms. PM ScHools for Rising India (PM SHRI) are delivering quality teaching, and nurturing holistic and well-rounded individuals. The Skill India Mission has trained 1.4 crore youth, upskilled and reskilled 54 lakh youth, and established 3000 new ITIs. A large number of new institutions of higher learning, namely 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS and 390 universities have been set up,” she said. Pointing out that PM Mudra Yojana sanctioned 43 crore loans aggregating to Rs 22.5 lakh crore for entrepreneurial aspirations of the youth, she said, “Besides that, Fund of Funds, Start Up India, and Start Up Credit Guarantee schemes are assisting our youth. They are also becoming ‘rozgardata’. 20. The country is proud of our youth scaling new heights in sports. The highest ever medal tally in Asian Games and Asian Para Games in 2023 reflects a high confidence level. Chess prodigy and our Number-One ranked player Praggnanandhaa put up a stiff fight against the reigning World Champion Magnus Carlsson in 2023. Today, India has over 80 chess grandmasters compared to little over 20 in 2010,” she said.
MOMENTUM FOR WOMEN POWER
Sitharaman said that the empowerment of women through entrepreneurship, ease of living, and dignity for them gained momentum in these ten years. “Thirty crore Mudra Yojana loans have been given to women entrepreneurs. Female enrolment in higher education has gone up by twenty-eight per cent in ten years. In STEM courses, girls and women constitute forty-three per cent of enrolment - one of the highest in the world. All these measures are getting reflected in the increasing participation of women in the workforce,” she said.
She asserted that making ‘Triple Talaq’ illegal, reservation of one-third seats for women in the Lok Sabha and State legislative assemblies, and giving over seventy per cent houses under PM Awas Yojana in rural areas to women as sole or joint owners enhanced their dignity.
NO CHANGE IN TAX STRUCTURE
No change relating to taxation has been proposed in the interim budget. The same rates for direct taxes and indirect taxes, including import duties, have been retained. However, to provide continuity in taxation, certain tax benefits to Start-Ups and investments made by sovereign wealth or pension funds as also tax exemptions on certain income of some IFC units have been extended by one year up to March 31, 2025.
She also made an announcement to improve taxpayer services which was in line with the government’s vision to improve ease of living and ease of doing business.
With regard to non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, the Interim budget proposed to withdraw such outstanding direct tax demands up to Rs. 25000 pertaining to the period up to financial year 2009-10 and up to Rs. 10,000 for financial years 2010-11 to 2014-15. “This is expected to benefit about one crore tax payers,” it was stated.
RECORD HIKE IN CAPEX
With regard to the hiked capital expenditure outlay for the next year, being increased by 11.1 per cent to Rs 11,11,111 Cr, which would be 3.4 percent of the GDP, Finance Minister said that this was in the wake of building on the massive tripling of the capital expenditure outlay in the past 4 years. It would result in a huge multiplier impact on economic growth and employment creation.
As per the First Advance Estimates of National Income of FY 2023-24, presented along with the Finance Minister’s speech, India’s Real GDP is projected to grow at 7.3 per cent. This is also in line with the upward revision in growth projections for FY 2023-24 by the RBI (in its December 2023 Monetary Policy Committee meeting) from 6.5 per cent to 7 per cent, prompted by strong growth in Q2 of FY 2023-24.
The Finance Minister stated that strong growth in economic activity imparted buoyancy to revenue collections and pointed out that the GST collection stood at Rs 1.65 lakh Cr in December 2023. This is the seventh-time that gross GST revenues have crossed Rs 1.6 lakh Cr benchmark.
“States too have benefited. States’ SGST revenue, including compensation released to states, in the post-GST period of 2017-18 to 2022-23, has achieved a buoyancy of 1.22,” she said.
INCREASE IN DIRECT TAX COLLECTIONS
Appreciating the taxpayers for their support, Sitharaman said that over the last 10 years the direct tax collections had more than tripled and the return filers swelled to 2.4 times. She highlighted the fact the government reduced and rationalised the tax rates due to which under the new tax regime there was no tax liability for taxpayers with income up to Rs 7 lakh. She also mentioned an increase in threshold for presumptive taxation for retail businesses as well as professionals.
The Minister also mentioned a decrease in corporate tax rates for existing domestic companies from 30 percent to 22 percent and for certain new manufacturing companies to 15 percent.
WHITE PAPER IN OFFING
On the status of the Indian economy, the Union Minister said that in 2014 the responsibility to mend the economy step by step and to put the governance systems in order was enormous, which she said was done by the government successfully following its strong belief of ‘nation-first’.
She assured that the crisis of those years had been overcome and the economy had been put firmly on a high sustainable growth path with all-round development.
“The government will come out with a white paper, on where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years,” she announced.
INTEREST FREE LOAN TO STATES
In a major announcement, the Finance Minister said, the scheme of fifty-year interest free loan for capital expenditure to states would be continued this year with total outlay of Rs1.3 lakh Cr. “A provision of seventy-five thousand crore rupees as a fifty-year interest free loan is proposed this year to support the milestone-linked reforms of Viksit Bharat by the state governments,” she said.
BRIGHT SPOTS OF ECONOMY
Pointing out some of the bright spots of the economy, the Finance Minister informed that the Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh Cr, of which the tax receipts are Rs 23.24 lakh crore. The Revised Estimate of the total expenditure is Rs 44.90 lakh Cr. The revenue receipts at Rs 30.03 lakh Cr are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalization in the economy.
Sitharaman also stated that the gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.13 and 11.75 lakh crore respectively and both will be less than that in 2023-24.
She announced that the FDI inflow during 2014-23 was USD 596 billion marking a golden era and this is twice the inflow during 2005-14.
For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of ‘first develop India’, the Finance Minister added
3 MAJOR ECONOMIC RAILWAY CORRIDORS
For Railways, three major economic railway corridor programmes will be implemented-energy, mineral and cement corridors, port connectivity corridors, and high traffic density corridors. Moreover, forty thousand normal rail bogies will be converted to the Vande Bharat standards to enhance safety, convenience and comfort of passengers.
GROWTH IN AVIATION SECTOR
The Finance Minister said, “In Aviation sector, the number of airports have doubled to 149 and today five hundred and seventeen new routes are carrying 1.3 crore passengers. Indian carriers have pro-actively placed orders for over 1000 new aircrafts.”
HIGH-POWERED COMMITTEE TO CONSIDER POPULATION, DEMOGRAPHIC CHALLENGES
The Finance Minister announced that the government would form a high-powered committee for an extensive consideration of the challenges arising from fast population growth and demographic changes and the committee would be mandated to make recommendations for addressing challenges comprehensively in relation to the goal of ‘Viksit Bharat.’
Elaborating government’s humane and inclusive approach to development, she said that development programmes, in the last ten years, targetted each and every household and individual, through ‘housing for all’, ‘Har Ghar Jal’, electricity for all, cooking gas for all, bank accounts and financial services for all, in record time.
Sitharaman said that the states would be encouraged to take up comprehensive development of iconic tourist centres including their branding and marketing at global scale. Framework for rating of the tourist centres based on quality of facilities and services would be established and long-term interest free loans would be provided to States for financing such development on matching basis, she said.