The Union Budget of India is a comprehensive annual financial statement presented by the Finance Minister of India, Nirmala Sitharaman, in the Parliament. It outlines the government's revenue and expenditure for the fiscal year, which runs from April 1 to March 31, along with policy initiatives and financial reforms. Moreover, the budget is classified into two parts: Revenue Budget and Capital Budget.
Union Budget 2024 - Key Components
The Union Budget comprises several key components:
Revenue Budget
Revenue Receipts: This includes the government's earnings from taxes, fees, and other sources.
Revenue Expenditure: It encompasses the day-to-day expenses of the government, such as salaries, subsidies, and interest payments.
Capital Budget
Capital Receipts: These are funds raised by the government through borrowings and disinvestment.
Capital Expenditure: It includes investments in infrastructure, expenditure on assets, and loans to state governments and Union Territories.
Fiscal Policy
Fiscal Policy describes the government's approach to managing its revenue, expenditure, and debt to influence the economy and aims to achieve macroeconomic objectives such as economic growth, price stability, and employment generation.
Economic Survey
It is usually presented a day before the budget, the Economic Survey provides an overview of the economic performance of the country in the past year, including data on GDP growth, inflation, fiscal deficit, external sector performance, and other relevant economic indicators.
Sector-Wise Allocations
The budget allocates funds to various sectors like agriculture, education, healthcare, defense, infrastructure, etc., reflecting the government's priorities and policies for the upcoming fiscal year.
Tax Reforms and Proposals
Tax Reforms and Proposals suggest changes in tax rates, exemptions, and other measures to boost revenue or provide relief to taxpayers.
Social Schemes and Welfare Programs
Social Schemes and Welfare Programs highlight allocations for social welfare schemes and programs aimed at poverty alleviation, healthcare, education, and rural development.
Deficit Figures
The budget provides information on fiscal deficit, revenue deficit, and primary deficit, indicating the government's borrowing requirements and financial health.
Macro-Economic Assumptions
It includes assumptions about economic growth, inflation, and other key factors that guide the budget calculations.
Overall, the Union Budget of India plays a pivotal role in shaping the country's economic policies and priorities for the upcoming year. It is a comprehensive document that reflects the government's financial roadmap and its commitment to inclusive growth and development.
Nature of the Union Budget 2024
Finance Minister Nirmala Sitharaman is scheduled to unveil the budget for the Financial Year 2024-25 on February 1. This marks the conclusive annual financial statement of the second term led by Prime Minister Narendra Modi.
The customary pre-budget 'halwa' ceremony took place last week, initiating a 'lock-in' period for officials engaged in budget preparation to uphold confidentiality until the document is presented in the Lok Sabha.
This budget is inherently 'interim' given the imminent general election scheduled for April-May this year. The comprehensive budget is anticipated to be unveiled in July by the incoming government. In the Indian context, the financial year commences on April 1 and concludes on March 31 of the subsequent year.
"What is an Interim Budget? An Interim Budget is tabled by the government in the Parliament if it does not have the time to present a full budget, or if the general elections are around the corner."
Why Was the Budget Presentation Date Changed to February 1?
The Union Budget of India is presented on the 1st of February each year by the Finance Minister of India. The change in the budget presentation date was announced in 2016 as part of the government's efforts to ensure that the budgetary process is completed before the beginning of the new financial year, which starts on April 1.
Before 2017, the Union Budget was presented on the last working day of February. Additionally, the early presentation of the budget offers several advantages, including facilitating the timely implementation of schemes, ensuring parliamentary approval before the start of the financial year, boosting investor confidence, and providing taxpayers and businesses with ample time for effective tax planning.
Therefore, the 1st of February was chosen as the budget presentation date to align with the global financial calendar and to give more time for the budgetary proposals to be implemented seamlessly from the beginning of the financial year.
Union Budget 2024 - Expectations
This week, Finance Minister Nirmala Sitharaman will present the Interim Budget or Vote on Account for 2024 on February 1, 2024. The Union Budget 2024 is slated for presentation around 11:00 AM on Thursday.
Like every year, there are high expectations from Budget 2024 to bring relief to the common man, middle class, farmers, women, and the industry. Salaried taxpayers are eyeing potential modifications to income tax slabs, adjustments in the new income tax regime, and increases in the standard deduction and Section 80C limits, with the anticipation of greater tax relief.
There are also expectations that the Narendra Modi government is poised to fulfill its fiscal deficit objective, concurrently sustaining its investment drive in key infrastructure sectors such as roadways and railways.
Record-Breaking Allocation Expected for Railway Budget
Sudhansu Mani, the retired ICF GM and designer of Vande Bharat Express, suggests that it wouldn't be surprising if the budget allocation for railway capital expenditure this year reaches nearly Rs 3 lakh crore. This reflects the government's commitment to upgrading railway infrastructure, despite the financial challenges faced by Indian Railways.
Additionally, he emphasizes the need for improved execution timelines for major projects and strategic investments in essential areas. Moreover, he believes that Indian Railways should aim to generate its own surplus rather than relying on the government's annual capital expenditure push.
Here are some of the key expectations from the Union Budget 2024 -
Income Tax Benefits
Narayan Jain, National President of the All India Federation of Tax Practitioners, suggests that individual taxpayers might be in line for concessions under section 87A, leading to a potential increase in the overall tax exemption limit to Rs 8 lakh from the existing Rs 7 lakh, inclusive of rebates.
Steering Rural Growth & Investment
Considering the weaker-than-expected monsoon and muted rabi sowing in FY24, economist Sonal Badhan from the Bank of Baroda suggests that the upcoming Budget may emphasize rejuvenating rural growth. She predicts a commitment to robust government capital expenditure to stimulate private investments and propel overall economic growth.
To back these initiatives, Badhan envisions that the government might consider:
- Increasing the budget allocation to the PM Kisan Samman Nidhi (PM-KISAN) program, raising the budget from Rs 60,000 crore in FY24BE to around Rs 70,000-75,000 crore in FY25.
- Enhancing the budget allocation for the MG-NREGA scheme, projecting an increase from Rs 60,000 crore in FY24BE to about Rs 80,000-85,000 crore in FY25.
- Expecting more money to be set aside for affordable housing in both rural and urban areas, with a predicted increase to about Rs 1 lakh crore from the previously allocated Rs 80,000 crore in FY24BE.
FICCI's Call to Action - Urging the Centre to Maintain Focus on Investments and Manufacturing
The Federation of Indian Chambers of Commerce and Industry (FICCI) has outlined its vision for the forthcoming Budget, shedding light on a variety of essential sectors pivotal for steering economic growth.
Following a notable 37.4 percent surge in the government's Capital Expenditure (CapEx) allocation to Rs 10 lakh crore in the previous Budget, FICCI has underscored the necessity for an ongoing focus on public CapEx, given global developments and challenges. In addition, it has called for the implementation of a national classification system for green finance to heighten transparency in the field of sustainable financing.
Conclusion
In conclusion, the Union Budget 2024, scheduled for presentation on February 1, holds significance as an interim financial statement ahead of the imminent general elections. Finance Minister Nirmala Sitharaman is expected to address key concerns such as income tax modifications, increased allocations for essential sectors like railways, and a focus on rural growth.
The government's commitment to fiscal objectives and infrastructure development, particularly in the face of economic challenges, is under scrutiny. Experts anticipate enhanced allocations for social welfare programs, tax benefits, and measures to stimulate private investments. As the budget unfolds, its impact on economic growth and public welfare will become clearer.