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On February 1st, the budget for the Fiscal Year 2024-25 was presented by the Union Finance Minister, Nirmala Sitharaman.

About the Union Budget

• The Union Budget, presented annually on February 1 by the Finance Minister in the Lok Sabha, is the comprehensive financial statement of the Union Government of India.
• The Union Budget, also referred to as the Annual Financial Statement, is the yearly financial plan of the Government of India, formulated and presented by the Ministry of Finance. 
• The presentation is carried out by the budget division of the Department of Economic Affairs (DEA) within the finance ministry. 
• Constitutional Provisions: Governed by Article 112 of the Indian Constitution, the Union Budget is termed the Annual Financial Statement.
• Key budget documents include the Annual Financial Statement, Demands for Grants, Finance Bill, and Fiscal Policy Statements under the FRBM Act, 2003.

The budget consists of two primary components:-

• Annual Financial Statement

• This component outlines government revenue for the upcoming fiscal year.
• It includes two crucial aspects:-
• Revenue Receipts: Estimates the revenue the government anticipates receiving from citizens in the upcoming financial year.
• Revenue Expenditure: Encompasses the expenses required for the daily functioning of the economy and the provision of essential public services, facilities, and amenities to citizens.

• Demand for Grants

• This part highlights the estimated expenditures of the government and seeks funds from the Consolidated Fund of India.

Components of the Union Budget 

The Union Budget is categorized into the Revenue Budget and Capital Budget.

• Revenue Budget

• Focuses on the government's financial statements related to revenue receipts and expenses.
• Revenue Receipts: Anticipates the amount of revenue expected from citizens in the upcoming financial year.
• Revenue Expenditure: Encompasses expenses for the daily functioning of the economy and the provision of essential public services.

• Capital Budget

• Comprises the government’s capital receipts and expenditures during a financial year.
• Capital Receipts: Refers to loans raised by the government from various sources to fund long-term developmental needs.
• Capital Expenditure: Encompasses expenses for creating long-term assets and providing welfare facilities to citizens.

Objectives of Union Budget

• Economic Growth: Stimulate rapid and balanced economic growth.
• Social Justice and Equality: Promote fairness, ensuring benefits reach all sections of society.
• Resource Allocation: Effectively allocate resources to minimize unemployment and poverty.
• Fiscal Stability: Maintain fiscal stability by controlling prices, reducing disparities, and reforming the tax system.

Budget Preparation Process

• Initiated about six months before presentation, involving expenditure and revenue estimates from ministries and departments.
• The Halwa ceremony marks the beginning of document printing.
• Presented to Parliament on the last working day of February, followed by detailed discussions and approval.

Different Stages of Budget Session

• President’s Address: Outlining government priorities and legislative agenda.
• Economic Survey Presentation: Reviews past economic developments and provides an economic outlook.
• Union Budget Presentation: Presented by the Finance Minister on February 1st.
• General Budget Discussion: Allows parliamentary critique and debate on the Budget.
• Voting on Demands for Grants: Authorizes government expenditures.
• Passing of Finance Bill: Enacts taxation proposals, coming into effect after Presidential assent.

Types of Budgets

• Balanced Budget: Expected revenue equals expenditure.
• Deficit Budget: Expected spending exceeds revenue, covered by borrowing or reserves.
• Surplus Budget: Expected income exceeds expenditures, used to reduce inflation.
• Zero-Based Budget: Planning from scratch, considering efficient allocation.
• Gender Budget: Examines budget to assess gender equality in resource allocation.

Iconic Budgets

• Black Budget (1973-74): Noted for fiscal deficit during financial distress.
• Carrot & Stick Budget (1986): Contributed to ending the license raj, introducing MODVAT and combating economic offenders.
• Epochal Budget (1991): Marked the start of economic liberalization in India.
• Dream Budget (1997-98): Utilized the Laffer Curve principle, introducing tax reforms.
• Millennium Budget (2000): Laid the groundwork for the growth of India’s IT industry.
• Rollback Budget (2002-03): Known for withdrawal of several proposals.
• Once-in-a-Century Budget (2021): Aiming to revive the economy through infrastructure and healthcare investments, privatisation, and robust tax collections.

Interesting Facts About Budget Sessions during 2014-2024

• Nirmala Sitharaman is the third finance minister in the Modi administration since 2014.
• Arun Kumar Jaitley rescheduled the budget presentation to the first day of the month.
• Sitharaman, the second female minister to present the budget after Indira Gandhi.
• "Bahi-khata" with the National Emblem chosen for speech and documents instead of a traditional budget briefcase.
• This Interim Budget is Sitharaman's sixth and the 12th budget of the Modi administration.
• Sitharaman will be the second finance minister to present her sixth straight budget.
• Sitharaman breaks the record of presenting five consecutive budgets, setting a new precedent.

 

About the Interim Budget An Interim Budget is presented by a government in its transition period or last year in office before general elections.  It is a traditional practice as incumbent governments cannot present a full Union Budget in the election year.  The Finance Minister presents the Interim Budget during a joint sitting of Parliament, seeking approval to draw money from the Consolidated Fund of India for budget expenses until March 31. The Interim Budget may focus on outlining the government's economic vision for the next five years if it returns to power. The government does not present the Economic Survey along with the Interim Budget. No major policy announcements are made that could financially burden the next government presenting the full Union Budget. Adheres to the Election Commission's Code of Conduct, avoiding major schemes that could influence voters. Key components of Interim Budget:- Expenditure allocation Policy limitation Approval process Purpose and Features Approval and Transition: The incumbent government seeks approval to draw funds to meet budget expenses before the financial year ends. Traditional Practice: Occurs in the run-up to general elections, allowing the government to list achievements and gain voter support. Similar to Union Budget: Presents estimates of expenditure, revenue, fiscal deficit, and financial projections for the upcoming fiscal year. Duration: Typically covers three to four months to ensure the country's uninterrupted functioning. Significance An interim budget serves as a temporary financial plan in case of time constraints or approaching general elections. Ensures the continuity of essential services and covers expenditures for the initial months of the fiscal year. Why is an Interim Budget prepared? Year of Lok Sabha elections; interim budget to avoid financial difficulties. No major policy changes; a vote-on-account before general elections. Approval by Parliament authorizes government expenditure for April-July. About Interim Budget 2024 Scheduled for February 1, 2024, at 11 am. Halwa Ceremony on January 24, 2024, marked the commencement. The Budget Session starts on January 31, 2024. Interim Budget presented on February 1, 2024. Budget Session concludes on February 9, 2024. New fiscal year begins on April 1, 2024. Expected time frame for the new government to present the full budget: May-June 2024. Difference between Interim Budget and Union Budget Interim Budget: Presented by the outgoing government, focuses on essential expenditures and policy continuity. Union Budget: Comprehensive financial plan presented annually, outlining revenue, expenditure, and policy initiatives for the upcoming fiscal year.

 

Interim Union Budget 2024-25 Highlights

 

Part A: Social Justice Part A - Macro-economic section announcing government schemes and priorities with sector-wise allocations.

 

 Prime Minister's Focus

• Upliftment of 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth), and 'Annadata' (Farmer).
• 'Garib Kalyan, Desh ka Kalyan':
• 25 crore people lifted out of multi-dimensional poverty in the last decade.
• DBT of Rs. 34 lakh crore via PM-Jan Dhan accounts, saving Rs. 2.7 lakh crore for the Government.
• PM-SVANidhi aided 78 lakh street vendors; 2.3 lakh received credit for the third time.
• PM-JANMAN Yojana for vulnerable tribal groups (PVTG).
• PM-Vishwakarma Yojana supporting artisans and craftspeople in 18 trades.

Welfare of 'Annadata'

• PM-KISAN SAMMAN Yojana assisted 11.8 crore farmers.
• PM Fasal Bima Yojana providing crop insurance to 4 crore farmers.
• e-NAM integrated 1361 mandis, serving 1.8 crore farmers with a trading volume of Rs. 3 lakh crore.

Momentum for Nari Shakti

• 30 crore Mudra Yojana loans for women entrepreneurs.
• 28% increase in female enrollment in higher education.
• 43% of enrollment in STEM courses by girls and women.
• Over 70% of PM Awas Yojana houses are allocated to rural women.

PM Awas Yojana (Grameen)

• Despite COVID challenges, the target of three crore houses will be achieved soon.
• Two crore more houses to be constructed in the next five years.

Rooftop Solarization and Muft Bijli

• 1 crore households receive 300 units of free electricity monthly through rooftop solarization.
• Expected annual savings per household: Rs. 15,000 to Rs. 18,000.

Ayushman Bharat

• Healthcare cover under Ayushman Bharat extended to all ASHA workers, Anganwadi Workers, and Helpers.

Agriculture and Food Processing

• Pradhan Mantri Kisan Sampada Yojana benefiting 38 lakh farmers, generating 10 lakh employment.
• Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana aiding 2.4 lakh SHGs and 60,000 individuals.

Research and Innovation for Growth

•  A corpus of Rs.1 lakh crore established for deep-tech technologies in defense and promoting 'atmanirbharta.'

• Infrastructure

• 11.1% increase in capital expenditure for infrastructure development and employment generation (Rs.11,11,111 crore).

• Railways

• Implementation of three major economic railway corridor programs under PM Gati Shakti.
• Conversion of 40,000 normal rail bogies to Vande Bharat standards.

• Aviation Sector

• Number of airports doubled to 149.
• 517 new routes carrying 1.3 crore passengers.
• Indian carriers placed orders for over 1000 new aircraft.

• Green Energy

• Coal gasification and liquefaction capacity of 100 MT to be set up by 2030.
• Mandatory blending of compressed biogas (CBG) in CNG and PNG to be phased in.

Tourism Sector

•  States encouraged for comprehensive development of iconic tourist centers.
•  Framework for rating tourist centers based on quality of facilities to be established.
•  Long-term interest-free loans to states for development on a matching basis.

Investments and Reforms for 'Viksit Bharat'

•  FDI inflow during 2014-23: USD 596 billion, twice that of 2005-14.
•  Rs. 75,000 crore provision for fifty-year interest-free loan to support reforms by State Governments.

Revised Estimates (RE) 2023-24

• Total receipts: Rs. 27.56 lakh crore; tax receipts: Rs. 23.24 lakh crore.
• Total expenditure: Rs. 44.90 lakh crore.
• Revenue receipts expected to exceed Budget Estimate, reflecting strong growth and formalization.
• RE fiscal deficit: 5.8% of GDP for 2023-24.

Budget Estimates 2024-25

• Total receipts: Rs. 30.80 lakh crore; total expenditure: Rs. 47.66 lakh crore.
• Tax receipts estimated at Rs. 26.02 lakh crore.
• Fifty-year interest-free loan for capital expenditure to states continued with total outlay of Rs. 1.3 lakh crore.
• Fiscal deficit estimated at 5.1% of GDP.
• Gross and net market borrowings for 2024-25 estimated at Rs. 14.13 and Rs. 11.75 lakh crore respectively.

Part B: Taxation Part B - Encompasses the Finance Bill, detailing taxation proposals such as income tax revisions and indirect taxes.

 

Direct Taxes

• Retention of same tax rates.
• Tripled direct tax collection in the last 10 years.
• Withdrawal of outstanding direct tax demands up to Rs. 25,000 for FY 2009-10 and up to Rs. 10,000 for FY 2010-11 to 2014-15, benefiting one crore taxpayers.
• Extension of tax benefits to Start-Ups and investments by sovereign wealth funds or pension funds until 31.03.2025.
• Extension of tax exemption on certain income of IFSC units until 31.03.2025.

Indirect Taxes

• Retention of same tax rates for indirect taxes and import duties.
• GST's positive impact: doubled average monthly gross GST collection, doubled tax base, and increased SGST revenue buoyancy.

• Tax rationalization efforts over the years:

• No tax liability for income up to Rs. 7 lakh.
• Presumptive taxation threshold increased for retail businesses and professionals.
• Corporate income tax decreased to 22% for existing domestic companies and 15% for new manufacturing companies.

Achievements in Tax-Payer Services

• Average processing time of tax returns reduced to 10 days.
• Introduction of Faceless Assessment and Appeal for greater efficiency.
• Reforms in customs leading to reduced import release time.

Economy-Then and Now

• In 2014: Attract investments, support reforms, give hope to the people.
• Government's success with a 'nation-first' approach.
• White Paper on economic progress to be laid on the table of the house.