Full Budget 2024 | Why One Can Expect the Most Populist Union Budget This Time
Here are some key points from the Interim Budget 2024:
- Theme: The budget is themed around “Viksit Bharat Budget 2024”, focusing on inclusive development with pillars like Garib, Mahilayen, Yuva, and Annadata.
- Tax Proposals: No change in tax rates for FY 2024-25; no tax liability for income up to Rs. 7 lakh under the new regime; corporate tax rates of 22% for existing companies and 15% for new manufacturing firms.
- GST and Customs: Monthly GST collections doubled to Rs. 1.66 lakh crore; no changes in customs rates.
- Infrastructure: Emphasis on developing physical, digital, and social infrastructure under the Viksit Bharat 2047 roadmap.
- Youth and Farmers: Significant support through Skill India Mission and PM Mudra Yojana for youth; direct financial assistance and market integration for farmers.
- Green and Sustainable Development: Funding for offshore wind energy and coal gasification; emphasis on sustainable practices like biomanufacturing.
- Healthcare and Social Welfare: Initiatives include cervical cancer vaccination, expansion of Ayushman Bharat, and enhanced healthcare coverage.
- Budget Allocations: Notable allocations include 6.2 lakh crore for Defence, 2.78 lakh crore for Railways, and 1.27 lakh crore for Agriculture.
- Economic Strategy: Focus on proactive inflation management and widening the GST tax base.
These points highlight the key areas and initiatives outlined in the Interim Budget 2024, aimed at inclusive growth and sustainable development across various sectors in India.
Balancing Economic Reforms and Populist Measures
The Modi 3.0 administration is anticipated to strike an equilibrium between economic reforms and populist measures in its fiscal policies. The common citizen, the farmer, the young job seeker, and the entrepreneur are all looking to the central government with optimism for populistic declarations. Additionally, the government is expected to make strategic moves to solidify its coalition ties, according to political observer and writer Sayantan Ghosh.
A Crucible of Expectations
As the Modi 3.0 government reveals its budget, anticipation is high, and political circles are rife with speculation. This budget transcends a mere financial statement; it serves as a litmus test for the newly formed NDA coalition’s dedication to its diverse electorate. The common citizen, the farmer, the young job seeker, and the entrepreneur are all hoping for populistic announcements that will alleviate their burdens and foster prosperity. Amid these high expectations, the government is also likely to make strategic maneuvers to strengthen its coalition ties, especially with states pivotal to its formation.
Special Financial Packages for States
Special financial packages for these states are not merely expected but almost certain. These gestures are crucial for maintaining the delicate balance of power within the coalition and ensuring the government’s stability.
Populist Economic Reforms
The budget is likely to have a populist inclination, with economic reforms designed to resonate with the masses. Initiatives promising immediate job creation, infrastructure development, and economic stimulation will likely be prominent, addressing pressing issues of unemployment and economic slowdown.
Focus on the Agrarian Sector
The agrarian sector, a traditional stronghold for the NDA, is expected to receive significant attention. With rural distress being a pressing issue, the government might introduce enhanced support for farmers to alleviate their hardships and secure their loyalty.
Employment Generation Initiatives
With the youth demographic emerging as a decisive factor, employment generation initiatives are anticipated to be a central theme. The government’s approach to education and healthcare is also expected to be populist, with potential announcements including new institutions and increased funding for accessible services.
A Statement of Intent
This budget is more than just numbers; it’s a statement of intent, a governance roadmap, and a reflection of the Modi 3.0 government’s political and economic vision. It signifies inclusivity, development, and growth, intertwined with populism and political pragmatism. The nation watches closely as the government prepares to navigate the complex waters of coalition politics and public expectations.
Strengthening Coalition Ties
The budget, likely to be announced by mid-July, is poised to be a masterful blend of fiscal responsibility and political acumen. It has the potential to strengthen the alliance between the Bharatiya Janata Party (BJP) and its key partners, including the Janata Dal (United), Telugu Desam Party, and Lok Janshakti Party (Ram Vilas).
Economic Reforms with a Populist Bent
The Modi 3.0 administration aims to balance economic reforms with populist measures in its fiscal policies, addressing the immediate needs of the people while building long-term economic resilience.
Employment Generation Initiatives
The Union government is expected to prioritize employment generation initiatives to tackle unemployment. This approach serves both economic and political purposes, responding to economic needs and countering opposition criticism of the BJP’s perceived failure to generate employment.
Agricultural and Rural Focus
The Modi government’s budget is expected to prioritize agriculture and rural development, responding directly to electoral feedback from key agrarian states like Haryana, Rajasthan, and Uttar Pradesh. Enhanced Minimum Support Prices, comprehensive loan waivers, and effective Direct Benefit Transfers are likely to be announced to appease farmers and regain their trust. The Jat community’s discontent, stemming from issues like OBC reservation and the handling of farmers’ protests, has significantly affected the BJP’s performance in these states. The government’s budget proposals are expected to address these grievances, aiming to mend ties and restore the BJP’s standing among these crucial voter segments.
Civil Aviation Industry Expectations
As Finance Minister Nirmala Sitharaman prepares to unveil the Union Budget 2024-25 later this month, the civil aviation industry expects policy interventions aimed at easing business and reducing the tax burden on the sector. In a memorandum, private airport operators have made several suggestions for rationalizing both direct and indirect tax structures.
Private Airport Operators Requests
The Association of Private Airport Operators, including GMR-run Delhi International Airport Ltd. and Adani-operated Mumbai International Airport Ltd., has requested the finance ministry to issue specific clarifications regarding tax charged by airlines on the user development fee, which is paid by passengers.
They argue that since airlines act merely as collection agents, they should not deduct tax at source on such amounts while making payments to airport operators, as it leads to a blockage of working capital for the airport operators.
Additionally, the group has requested the government to increase the duty-free allowance to ₹100,000 for purchases from duty-free shops in India, up from the current ₹50,000 limit set in April 2016. In line with inflation and to increase foreign earnings, the association has also requested the government to allow duty-free shop operators to sell domestic Indian liquor at departures tax-free and be treated as export.
Here’s a simplified table summarizing the key highlights from the Interim Budget 2024:
| Category | Highlights |
|---|---|
| Theme | Viksit Bharat Budget 2024 |
| Focus Areas | Poor (Garib), Women (Mahilayen), Youth (Yuva), Farmers (Annadata) |
| Direct Tax Proposals | – Same tax rates retained for FY 2024-25 – No tax liability up to Rs. 7 lakh income under new regime – 22% tax rate for corporate taxes, 15% for new manufacturing companies |
| GST and Customs | – Average monthly GST collection doubled to Rs. 1.66 lakh crore – Customs rates unchanged |
| Infrastructure and Investment | – Same tax rates retained for FY 2024-25 – No tax liability up to Rs. 7 lakh income under the new regime – 22% tax rate for corporate taxes, 15% for new manufacturing companies |
| Youth Empowerment | – 1.4 crore youth trained under Skill India Mission – 43 crore loans sanctioned under PM Mudra Yojana |
| Agriculture and Farmers | – Direct financial assistance to 11.8 crore farmers under PM-KISAN – Integration of 1,361 mandis under eNAM |
| Green and Sustainable Development | – Viability gap funding for offshore wind energy – Coal gasification capacity of 100 MT by 2030 |
| Healthcare and Social Welfare | – Cervical cancer vaccination for girls aged 9-14 years – Expansion of Ayushman Bharat scheme |
| Budget Allocations (INR lakh crore) | – Defence: 6.2 – Railways: 2.78 – Agriculture: 1.27 – Health: Allocations under Ayushman Bharat and other health initiatives |
| Economic Growth and Strategy | – Proactive inflation management – Deepening GST tax base |
This table provides a concise overview of the major points covered in the Interim Budget 2024, focusing on key sectors and initiatives.