“In the latest Budget speech, the Finance Minister of India, Nirmala Sitharaman, announced a path of fiscal consolidation, aiming to reduce the fiscal deficit below 4.5% by 2025-26. The fiscal deficit for the upcoming financial year, 2024-25, is estimated to be 5.1% of GDP, in adherence to the mentioned trajectory. Additionally, the Interim Budget proposes the establishment of a ₹1 lakh crore corpus to finance research through interest-free loans for 50 years. This initiative aims to provide long-term funding support for research and innovation in sunrise technology domains. Alongside this, there is a modest 11% increase in capital expenditure (capex) to ₹11.11 lakh crore for the same financial year, aligning with the rise in private investment”
On February 1, 2024, the Hon'ble Finance Minister of India, Nirmala Sitharaman, presented the Union Budget 2024 in Parliament. It marked FM Nirmala Sitharaman's sixth Union Budget. This budget was an interim one, presented ahead of the general elections later this year. Moreover, the comprehensive budget will be unveiled by the new government following the Lok Sabha Elections.
Focus on Youth and Women Empowerment
The Interim Budget 2024 stands out for its dedicated focus on youth and women empowerment, aligning with the government's commitment to inclusive growth. Despite being an interim budget, it strikes a balance between fiscal consolidation and capital expenditure (Capex). Additionally, Finance Minister Nirmala Sitharaman has notably reduced the fiscal deficit target for FY25 to 5.1% of the GDP.
Tax Regime and Praise from the Prime Minister
On the contrary, no adjustments were declared in the tax brackets under the old and new regimes. Furthermore, the Prime Minister of India, Shri Narendra Modi, has also praised the Finance Minister of India, Nirmala Sitharaman, for presenting a balanced budget. This reflects the government's commitment to financial stability.
In this analysis, we will explore the key highlights of the Interim Budget 2024-25. So, without causing any further delay, let's get started -
Key Highlights of the Interim Budget 2024-25
Unchanged Tax Rates: The direct and indirect tax rates remain unchanged, providing stability to the tax regime.
Tax Relief: The government has withdrawn income tax demands up to ₹25,000 for the fiscal year 2009-10 and ₹10,000 for the period from 2010-11 to 2014-15, benefiting approximately one crore taxpayers.
Homeownership Scheme: A new scheme will assist the middle class residing in rented houses to purchase or construct their own homes.
Extended Benefits: Tax benefits for start-ups and investments by sovereign wealth or pension funds have been extended by one year, now applicable until March 31, 2025.
Increased Capital Expenditure: There is an 11% increase in capital expenditure, reaching ₹11.11 lakh crore, reflecting a forward-looking approach.
Fiscal Discipline: The fiscal deficit for FY25 is estimated at 5.1%, a decrease from the revised estimate of 5.8% in FY24.
Reduced Borrowing: The government plans to borrow ₹14.13 lakh crore in the upcoming fiscal year, a reduction from ₹15.43 lakh crore in FY24.
GDP Growth: The projected nominal GDP growth for FY25 is set at 10.5%, indicative of economic optimism.
Disinvestment Targets: The anticipated disinvestment mop-up from central public sector enterprises (CPSEs) is set at ₹50,000 crore for FY25, a significant increase from ₹30,000 crore in FY24.
Tax Revenue and Targets: The gross tax revenue target for FY25 has been raised by 11.46% to ₹38.31 lakh crore, with direct tax collection set at ₹21.99 lakh crore and indirect tax at ₹16.22 lakh crore.
White Paper on Economy: A white paper on the mismanagement of the economy before 2014 will be issued by the government, emphasizing transparency.
Upcoming Reforms: Upcoming reforms designed for the next generation will be revealed in collaboration with States and stakeholders, ensuring a participative approach.
Population Growth Panel: A high-powered panel will be created to tackle challenges related to population growth and demographic changes.
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