Budget 2024

Source: PIB
GS III: Government Budgeting

Overview

1. News in Brief
2. Union Budget in Constitution
3. Key Points on Budget 2024
4. Sector Allocation
5. Taxes

Why in the News?

Union Finance Minister Nirmala Sitharaman presented the Interim Budget for the fiscal year 2024-25.

• This marks her sixth budgetary presentation as the finance minister, concluding her second term in the Modi government.

News in Brief

• Ahead of the upcoming Lok Sabha elections, an interim budget will be presented, with the comprehensive budget scheduled for release after the formation of the new government post-election.
• The interim budget addresses the financial requirements during the transitional period until a government is established following the Lok Sabha polls.
• Highlighting the achievements of the Government for the past 10 years explained while presenting the interim Budget.

Union Budget in Constitution

The constitution refers to the budget as the annual financial statement dealt with in Article 112.

The budget goes through six stages in the Parliament

1. Presentation of budget
2. General Discussion
3. Scrutiny by departmental committees
4. Voting on demands for grants
5. Passing of appropriation bill
6. The passing of the finance bill

Three kinds of funds for the Central government

1. Consolidated Fund of India (Article 266)
   • All revenues received by the Government of India
   • All loans raised by the Government by the issue of treasury bills, loans or ways and means of advances
   • All money received by the government in repayment of loans
2. Public Account of India (Article 266)
   • Provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, remittances and so on.
   • Payments from this account can by made without parliamentary appropriation.
3. Contingency Fund of India (Article 267)
   • To meet unforeseen expenditure pending its authorisation by the Parliament.
   • It is also operated by executive action.

Key Points on Budget 2024

I. Expense Receipts Deficits

• Expenditure
  • The government is estimated to spend Rs 47,65,768 crore in 2024-25, 6% higher than the revised estimate of 2023-24.
  • Interest payments account for 25% of the total expenditure and 40% of revenue receipts.
• Receipts
  • The receipts (other than borrowings) in 2024-25 are estimated to be Rs 30,80,274 crore, about 12% higher than the revised estimate for 2023-24.
  • Tax revenue which forms a major part of the receipts is also expected to increase by 12% over the revised estimate for 2023-24.
• Deficits
  • The revenue deficit in 2024-25 is targeted at 2% of GDP. This is lower than the revised estimate of 2.8% in 2023-24.
  • The fiscal deficit in 2024-25 is targeted at 5.1% of GDP, lower than the revised estimate of 5.8% of GDP in 2023-24.
• Transfer to states
  • The central government will transfer Rs 22,74,541 crore to states and union territories in 2024-25, an increase of 8.4% over the revised estimates of 2023-24.
  • Transfer to states includes devolution of Rs 12,19,783 crore out of the divisible pool of central taxes, grants worth Rs 8,90,858 crore, and special loans worth Rs 1,30,000 crore for capital expenditure.

Centre’s outstanding liabilities in 2024-25 are estimated to be 57% of the GDP. Outstanding liabilities had declined from 51% in 2013-14 to 48% in 2018-19. From 2019-20 onwards, outstanding liabilities have been increasing, and had reached a high of 61% in 2020-21, and have moderated thereafter.

II. Sector Allocation

• Agriculture
  • Public and private investment will be promoted in post-harvest activities including aggregation, storage, supply chain, processing and marketing.
  • Application of the Nano DAP fertiliser will be expanded in all agro-climatic zones.
  • A programme for supporting dairy farmers will be formulated.
  • PM Matsya Sampada Yojana will be expanded to:
    1. Enhance aquaculture productivity from three to five tonnes per hectare
    2. Double seafood exports to one lakh crore rupees
    3. Generate 55 lakh employment opportunities.
• Housing
  • An additional two crore houses will be built over the next five years under Pradhan Mantri Awas YojanaGrameen.
  • A new scheme will be launched to help sections of the middle class living in rented houses, slums, and unauthorised colonies, to buy or build their own houses.
• Health
  • Vaccination to prevent cervical cancer will be encouraged for girls between nine and 14 years of age.
  • A new platform, U-WIN, will be rolled out to manage immunisation nationwide.
  • Healthcare cover under the Ayushman Bharat scheme will be extended to all ASHA workers, Anganwadi workers and helpers.
• Railways 
  • 3 major economic railway corridor programmes identified under the PM Gati Shakti to be implemented to improve logistics efficiency and reduce cost
    • Energy, mineral and cement corridors
    • Port connectivity corridors
    • High-traffic density corridors
  • Forty thousand normal rail bogies to be converted to Vande Bharat standards
• Energy
  • Rooftop solarisation of one crore households will be taken up.
  • To achieve net zero by 2070, the blending of compressed biogas in CNG and PNG will be a man.
• Environment
  • EV manufacturing and charging infrastructure will be strengthened and expanded.
  • Adoption of E-buses for public transport will be encouraged.
  • Blue economy 2.0 scheme will be launched to restore coastal aquaculture and mariculture.
  • A new scheme will be launched to provide environment-friendly alternatives such as biodegradable polymers, bio-plastics and bio-pharmaceuticals.
• Research
  • To encourage the private sector to scale up research and innovation, a corpus of one lakh crore rupees will be
    set up.
  • This corpus will provide long-term loans at low or nil interest rates.
• Infrastructure
  • Capital expenditure outlay for Infrastructure development and employment generation is to be increased by 11.1 per cent to Rs.11,11,111 crore, which will be 3.4 per cent of the GDP.
• Tourism sector
  • States are to be encouraged to take up comprehensive development of iconic tourist centres including their branding and marketing at the global scale.
  • Framework for rating of the tourist centres based on quality of facilities and services to be established.
  • Long-term interest-free loans are to be provided to States for financing such development on a matching basis.

Demographic changes: A high-powered committee will be set up to address challenges arising out of fast population growth and demographic changes.

III. Taxes

Tax rationalization efforts over the years

• No tax liability for income up to Rs 7 lakh, up from Rs 2.2 lakh in  FY 2013-14
• The presumptive taxation threshold for retail businesses increased to Rs 3 crore from Rs 2 crore
• The presumptive taxation threshold for professionals increased to Rs 75 lakh from Rs 50 lakh
• Corporate income tax decreased to 22% from 30% for existing domestic companies
• The corporate income tax rate at 15% for new manufacturing companies

Direct taxes

Income tax, Capital Gains Tax, corporation tax, property tax, inheritance tax and gift tax are examples of direct tax

• FM proposes to retain the same tax rates for direct taxes
• Direct tax collection tripled, and return filers increased to 2.4 times, in the last 10 years
• Government to improve taxpayer services
  • Outstanding direct tax demands up to Rs 25000 for the period up to FY 2009-10 withdrawn
  • Outstanding direct tax demands up to Rs 10000 for financial years 2010-11 to 2014-15 withdrawn
  • This will benefit one crore taxpayers

Indirect taxes

Sales Tax, Service Tax, Custom Duty, Value Added Tax (VAT), Goods & Services Tax (GST) are examples of Indirect Taxes.

• FM proposes to retain the same tax rates for indirect taxes and import duties
• GST unified the highly fragmented indirect tax regime in India
  • Average monthly gross GST collection doubled to Rs 1.66 lakh crore this year
  • The GST tax base has doubled
  • State  SGST revenue buoyancy (including compensation released to states) increased to 1.22  in the post-GST period(2017-18 to 2022-23) from 0.72 in the pre-GST period (2012-13 to 2015-16)
  • 94% of industry leaders view the transition to GST as largely positive
  • GST led to supply chain optimization
  • GST reduced the compliance burden on trade and industry
  • Lower logistics costs and taxes  helped reduce the prices of goods and services, benefiting the consumers

Average processing time of tax returns has reduced to 10 days from 93 days in 2013-14.

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