Interim Budget 2024 - II

What’s in today’s article?

• Why in news?
• Main takeaways from the interim Budget of 2024-25

Why in news?

• Finance Minister Nirmala Sitharaman presented the Union Budget for the next financial year (2024-25).
• It was her sixth budget presentation, but was different from all the others because this was an interim budget.

Main takeaways from the interim Budget of 2024-25

• Capital expenditure outlay for the next year
  • Capital expenditure outlay for the said period has been increased by 11.1 per cent to Rs 11,11,111 crore, which would be 3.4 per cent of the GDP.
  • This is in the wake of building on the massive tripling of the capital expenditure outlay in the past 4 years resulting in huge multiplier impact on economic growth and employment creation.
• Real GDP growth rate
  • India’s Real GDP is projected to grow at 7.3 per cent in FY 2023-24.
  • Indian economy has demonstrated resilience and maintained healthy macro-economic fundamentals, despite global economic challenges.
  • As per the IMF, India is likely to become the third-largest economy in 2027(in USD at market exchange rate).
  • It also estimated that India’s contribution to global growth will rise by 200 basis points in 5 years.
  • Moreover, various international agencies such as the World Bank, the IMF, OECD and ADB project India to grow between 6.4 per cent, 6.3 per cent, 6.1 per cent and 6.7 per cent, respectively in 2024-25.
• GST collection
  • Strong growth in economic activity has imparted buoyancy to revenue collections and pointed out that GST collection stood at ₹1.65 lakh crore in December 2023.
  • This is the seventh-time that gross GST revenues have crossed ₹1.6 lakh crore benchmark.
• Receipts and Expenditure
  • In 2024-25, the total receipts other than borrowings and the total expenditure are estimated at Rs 30.80 and 47.66 lakh crore respectively.
  • The tax receipts are estimated at Rs 26.02 lakh crore.
    • The Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh crore, of which the tax receipts are Rs 23.24 lakh crore.
    • The Revised Estimate of the total expenditure is Rs 44.90 lakh crore.
  • The revenue receipts at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalization in the economy.
• Help extended to State Govts
  • The scheme of fifty-year interest free loan for capital expenditure to states will be continued this year with total outlay of Rs1.3 lakh crore.
  • A provision of 75000 crore rupees as fifty-year interest free loan is proposed this year to support the milestone-linked reforms of Viksit Bharat by the State Governments.
• Fiscal consolidation
  • To reduce fiscal deficit below 4.5 per cent by 2025-26, the fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP, adhering to that path.
    • Budget 2021-22 had announced to reduce the fiscal deficit below 4.5 per cent by 2025-26.
  • Similarly, 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.
• FDI inflow
  • 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, govt is negotiating bilateral investment treaties with foreign countries, in the spirit of ‘first develop India’.
• Achievement on the developmental aspects
  • The Government has assisted 25 crore people to get freedom from multi-dimensional poverty.
  • PM Mudra Yojana has sanctioned 43 crore loans aggregating to Rs 22.5 lakh crore for entrepreneurial aspirations.
    • Thirty crore Mudra Yojana loans have been given to women entrepreneurs.
  • PM Awas Yojana (Grameen) is close to achieving the target of three crore houses and two crore more houses will be taken up in the next five years to meet the requirement arising from increase in the number of families.
  • Similarly, through rooftop solarization, one crore households will be enabled to obtain up to 300 units free electricity every month.
  • Pradhan Mantri Kisan Sampada Yojana has benefitted 38 lakh farmers and generated 10 lakh employment.
  • Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has assisted 2.4 lakh SHGs and sixty thousand individuals with credit linkages.
• Promoting startups
  • For tech savvy youth, a corpus of rupees one lakh crore will be established with fifty-year interest free loan.
  • The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates.
  • This will also encourage the private sector to scale up research and innovation significantly in sunrise domains.
• 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.
• Aviation
  • 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.
• Committee to study challenges arising from fast population growth
  • The Government will form a high-powered committee for an extensive consideration of the challenges arising from fast population growth and demographic changes.
  • The committee will be mandated to make recommendations for addressing these challenges comprehensively in relation to the goal of ‘Viksit Bharat’.

Q1) What is Foreign direct investment (FDI)?

Foreign direct investment (FDI) is a type of cross-border investment. It involves an investor from one country establishing a lasting interest in a business or corporation in another country. FDI is a key driver of economic growth.

Q2) What is What is Fiscal Consolidation?

Fiscal consolidation is a government policy that aims to reduce deficits and debt accumulation. It involves reducing the fiscal deficit, which can be achieved by increasing revenue and reducing spending.

Source: SUMMARY OF THE INTERIM UNION BUDGET 2024-25