A Handbook on Union Budget 2024-25 Highlights

On Thursday, February 1, 2024, the Union Finance Minister Nirmala Sitharaman presented her 6th consecutive Union Budget ahead of the Parliamentary elections. This Union Budget is for the upcoming financial year 2024-25. As it is the last one before the Lok Sabha elections, the budget is an interim one. The full budget will be presented in July 2024, with the formation of a new government in the elections. 

Going Back in Time

The Finance Minister said the Indian economy has witnessed a profound positive transformation in the last 10 years. She highlighted several initiatives, such as crop assistance provided to farmers, approaches taken to tackle poverty, support provided to women and students and digital infrastructure. She added that the Indian economy got a new vigour, and the fruits of development reached people at scale. The government will focus on a saturation approach of covering – reducing corruption, preventing nepotism, more transparency and assurance, fair distribution of resources, access to opportunities, and addressing system inequalities. 

Now let’s look into the significant points from the Union Budget for 2024-25, which includes significant allocations to key sectors, tax regulations and much more.

Key Highlights from Union Budget 2024-25

1. No Changes in Taxation

Finance Minister Sitharaman proposed no changes to income tax slabs. She proposed maintaining the existing tax rates for both direct and indirect taxes, which include import duties. A few noteworthy points in this landscape are:

• The average processing time of tax returns was reduced to 10 days this year.
• In 2024-25, the tax receipts are expected to be at ₹26.02 lakh crore.
• A proposal to withdraw a large number of petty or disputed tax demands up to ₹25,000 pertaining to years up to 2009-10 and ₹10,000 from 2010 to 2015. This will help 1 crore taxpayers.
• Sovereign wealth funds and pension funds will receive an additional year of tax-free investments. There are certain lingering direct tax requests that the government will remove.

2. GST Tax Base Doubled

The tax base of GST has doubled. The Finance Minister said that the average GST monthly collection has almost doubled to ₹1.66 lakh crore this year.

3. Viksit Bharat and GDP

The government is also working in the direction of making India ‘Viksit Bharat’, which means Developed India by 2024. India’s real GDP clocked a growth of 7.7% between April and September 2023, which is the highest among the major economies.

In a review report ahead of the interim budget, the Ministry of Finance announced that the Indian economy is likely to grow by more than 7% in the upcoming years and is also anticipated to become the 3rd largest economy in the world by 2027, with a GDP of $5 trillion.

While the Union Budget focused more on youth, poor, farmers and women, the Finance Minister also gave a new definition for GDP – Governance, Development, and Performance.

4. Capital Expenditure and Fiscal Deficit

The capital expenditure target for FY 2025 has been set at ₹11.1 lakh crore, up by 11.1%. 

The total receipts, apart from borrowings and total expenditure, are estimated at ₹30.80 and ₹47 lakh crore. The interest-free loan schemes will continue next year with an outlay of ₹1.3 lakh crore. Looking into the revised fiscal deficit, the gap between the government’s revenue and expenses is 5.8% of the GDP for FY 2023-24. The fiscal deficit in FY 2025 is expected to be 5.1% of GDP. The target is to lower the fiscal deficit to below 4.5% of the GDP in FY 2025-26.

5. Assistance in Housing

Under the  Pradhan Mantri Awas Yojana – Gramin (PMAY-G), the Government is close to achieving the target of 3 crore houses. Additionally, 2 crore houses are announced in this budget. The Government also plans to launch a housing scheme for the middle class to assist them in buying their own homes.

6. India-Middle East-Europe Trade Corridor 

The Finance Minister said that the India-Middle East-Europe trade corridor, announced during the G20 Summit last year, will be a game-changer for India and the rest of the world. 

7. Loan for Tech-Enthusiasts

The budget is expected to bring a golden era for the technology-enthusiastic youth. A corpus of ₹1 lakh crore will be established with a 50-year interest-free loan provided. The corpus will provide long-term financing and refinancing with long tenures at low or nil interest rates. This is to encourage the private sector to increase research and innovation significantly.

8. Set Up Medical Colleges

The Finance Minister disclosed plans to establish additional medical colleges by utilising the “existing hospital infrastructure under various departments”. They are planning to set up a committee for this purpose in order to analyse the challenges and provide relevant solutions.

9. Reservation and Housing for Women

Triple talaq has been banned, and 1/3rd seats are reserved for women in the Lok Sabha and state assemblies. Also, under the PM Awas Yojana, more than 70% of houses are to be allocated to women in rural areas.

10. Free Electricity and Loans for States

With the help of rooftop solarisation, about 1 crore households will be provided up to 300 units of free electricity monthly. The government strives to achieve ‘net zero’ by 2070. Long-term interest-free loans are to be provided to states for development, which can boost tourism.

11. Strategy for Amrit Kaal

The government will adopt economic policies that will strengthen and sustain growth, improve productivity, create opportunities for all, and help people enhance their capabilities. 

Indian households can expect savings of ₹18,000 crore per annum through free energy and selling their excess generation to the grid.

The development of a comprehensive support programme for dairy farmers is underway, and the fight against foot and mouth disease is well underway. Despite having poor milch yield, India is the world’s top producer of dairy products. Realising the importance of helping fishermen, the government set up a separate fisheries department. Since 2013-14, seafood exports have doubled. The implementation of the PM Matsya Sampada Yojana will be stepped up.

12. Supporting Green Energy 

The government will be supporting the development of shore-wind energy with funding, establishing 100 metric tons of coal gasification and liquefaction capacity by 2030, and mandating the gradual integration of compressed biogas with natural gas in transportation and domestic use.

13. Upgrade Anganwadi Centres

The government is planning to upgrade the Anganwadi centres and plans to focus on various schemes for maternal and child health care. They also said that the Ayushman Bharat scheme will be extended to all ASHA and Anganwadi workers and helpers.

14. Support to the EV Sector and Start-Ups

The EV ecosystem will be expanded and strengthened by supporting manufacturing and charging infrastructure. A new scheme of bio-manufacturing will be launched to promote green growth. The start-up tax incentive will last until March 31, 2025. 

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Disclaimer: This blog has been written exclusively for educational purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making investment-related decisions.