Budget 2024: Strategy Shift for Amrit Kaal as Kartavya Kaal

The 2024 financial budget is called an interim budget by the Government of India. It's like a temporary budget because the current government is pretty confident about winning the upcoming Lok Sabha election. They want to announce the real budget in July 2024, after getting re-elected.

Also, there's a rule from the election commission called "Model Code of Conduct or Aachar Sanhita." It says that the current government can't make a budget that tries to win votes before the election. This rule is to make sure the government doesn't have an unfair advantage.

Let's not dive into political discussions. Instead, we're here to share the main points of this interim budget.

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Key Numbers 📊

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Before we get into all the details of the budget, below are the important numbers from the interim budget:
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Budget At a Glance

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In the Budget for 2024, the Finance Minister declared that the theme for this year would be 'Viksit Bharat Budget 2024,' aiming for a developed India by the year 2047.

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GYAN

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The budget has a strong focus on GYAN, which stands for Garib (Poor), Yuva (Youth), Annadata (Farmer), and Naari (Women). The government is following an approach that aims to benefit everyone, reaching all corners and including everyone.

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Direct Tax Proposal

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There were not many changes in rates of direct taxes for individuals or corporations. In the FY 2024-25 Budget, the Finance Minister confirmed maintaining current tax rates for direct taxes. Individuals with an income up to Rs.7 lakh under the new tax regime will be exempt, while corporate taxes stay at 22% for existing domestic companies and 15% for certain new manufacturing companies.

According to an Economic Times survey, 43% of taxpayers wanted no tax below Rs. 10 lakh which is currently at Rs. 7 lakh. About a fourth wanted more exemptions. But with no change, the budget dampened the mood of individual taxpayers.

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Big Push for Infrastructure

The government remains committed to infrastructure development and plans to boost capital expenditure by 11.1% to ₹11.11 Lakh Cr, constituting 3.4% of the GDP.

This is a welcome initiative but this may put pressure on the fiscal deficit which is the difference between the Government’s earnings and spending. The fiscal deficit for FY23 was 6.4% of the GDP. The government aims to reduce this deficit to 5.8% in FY24 and further narrow it down to 5.1% in FY25.

This emphasizes the importance of engaging the private sector to maintain the partnership and work toward the Public Private Partnership (PPP) model.

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Key Announcements

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• Implementation of three major economic railway corridor programs under PM Gati Shakti: (1) energy, mineral, and cement corridors, (2) port connectivity corridors, and (3) high-traffic density corridors.
• Multi-modal connectivity projects identified under PM Gati Shakti to boost the logistics industry and reduce costs for all industries.
• Extension of 50-year interest-free loans to state governments for another year as part of the Gati Shakti master plan.
• Ministry of Road Transport and Highways (MoRTH) allocated Rs 2.78 lakh crore in FY25, a 2.8% increase.
• Indian Railways receives a capex boost of Rs 2.52 lakh crore for FY 2024-25, a 5% increase; 40,000 trains to be upgraded to Vande Bharat trains.
• Enhancement of the rooftop solar scheme (Pradhan Mantri Suryoday Yojna) for one crore households, aiming at savings of about 300 units of electricity per month and Rs 15,000-18,000 annually.

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Developing Blue Economy 2.0

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Key Maritime Facts for India:

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• Trade Backbone: Approximately 95% of India's international trade by volume relies on sea transport.
• Livelihood Dependence: Over 20 Crore people in India depend on the sea for sustenance and livelihood.

Hence, keeping in mind the above facts, the Government of India plans to develop a Blue Economy which will consist of:

• Focus on promoting climate-resilient activities and sustainable development in coastal areas.
• Prioritizing restoration, adaptation, and expanding coastal aquaculture and mariculture.

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Government's Fisheries Initiatives:

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• Establishment of a separate Department of Fisheries to support the livelihood of over 2.8 Crore people.
• Doubling of inland & aquaculture production and seafood exports since FY2014.

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Pradhan Mantri Matsya Sampada Yojana (PMMSY):

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• Aims to bring about the Blue Revolution by enhancing aquaculture productivity, doubling exports to ₹1 Lakh Crore, and generating 55 lakh employment opportunities.
• Establishment of 5 integrated Aquaparks supporting the study of diverse seaweed species.

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Seaweed Farming for Environmental Benefits:

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• Seaweed farms absorb nutrients and carbon dioxide, improving water quality and reducing ocean acidification.

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Green Measures

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The budget showed that the government is serious about supporting green energy, taking care of the environment, and addressing climate issues. The budget specifically pays attention to the energy sector, indicating a clear shift towards a future that is more sustainable and environmentally friendly.

Rooftop Solarization Initiative:

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• The government plans to empower 10 million households with rooftop solarization, providing up to 300 units of free electricity monthly.
• Inspired by the Prime Minister's resolve on the consecration of Shri Ram Mandir in Ayodhya.
• Expected annual savings for households: ₹15,000-18,000.
• Surplus electricity can be sold to distribution companies, creating a dual benefit for consumers and the broader energy grid.

Green Energy Measures:

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• Commitment to achieve 'net zero' by 2070.
• Viability gap funding for offshore wind energy potential with an initial capacity goal of one gigawatt.
• Establishment of coal gasification and liquefaction capacity of 100 million tonnes by 2030.
• Mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes.
• Financial assistance for biomass aggregation machinery to support collection.

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Defense: Securing the Country

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• Record over Rs 6.21 lakh crore allocation to Ministry of Defence in Interim Union Budget 2024-25; 4.72% more than FY 2023-24
• Rs 1.72 lakh crore - 27.67% of the total defense budget - allocated for capital acquisition; Budget to Armed Forces for revenue expenditure (Other than Salary) stands at Rs 92,088 crore
• Budgetary allocation for Defence pensions increased to Rs 1.41 lakh crore
• Rs 6,500 crore earmarked to strengthen border infrastructure; Rs 7,651.80 crore allocated to Indian Coast Guard; Budgetary allocation to DRDO enhanced to Rs 23,855 crore
• Rs one lakh crore corpus for Deep Tech for long-term loan to youth/companies
  

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MSME Push: PM Mudra Yojana:

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The government highlighted the implementation and continuation of the PM Mudra Yojana, sanctioning 43 crore loans amounting to ₹22.5 lakh crore to support entrepreneurial aspirations.

Pradhan Mantri Mudra Yojana (PMMY) is a scheme set up by the Government of India (GoI) through MUDRA (a subsidiary of SIDBI) that helps in facilitating micro credit up to Rs. 10 lakh to small business owners.

Decoding Budget for Startups

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The government has maintained its focus and support for startups. The tech and startups have attracted sizable strides in the interim budget.

In the Interim Budget for 2024-25, the focus on startups and fintech is highlighted by several key measures:

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Tax Benefits Extension for Startups:

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• Certain tax benefits for startups and investments by sovereign wealth or pension funds were set to expire on March 31, 2024.
• The Finance Minister proposed to extend these exemptions by a year until March 31, 2025, to provide continued support for the growth of startups.

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Startup Credit Guarantee Schemes:

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Implementation and support for Startup Credit Guarantee schemes, indicating the government's proactive stance in facilitating financial support for startups.

The Credit Guarantee Scheme for Startups (CGSS) is a government initiative aimed at providing credit guarantees to loans extended to startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).

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Boosting Electric Vehicle (EV) Infrastructure:

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• Plans to expand and strengthen the electric vehicle ecosystem by supporting manufacturing and charging infrastructure.
• Encouragement of higher adoption of e-buses for public transport networks through a payment security mechanism.
• Possible unveiling of an expanded third phase of the incentive scheme for electric vehicles.
• Addressing the deficiency of public charging stations, standing at 6,586 by March 2023.

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Research and Development (R&D) Corpus:

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• Establishment of a corpus of Rs 1 lakh crore with a 50-year interest-free loan to aid the growth of India’s tech-savvy youth.
• The corpus aims to enable long-term financing or refinancing with low or nil interest rates, encouraging the private sector to scale up research and innovation in sunrise domains.

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Focus on Hardware and Electronic Manufacturing:

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• Revival of the Indian Semiconductor Mission (ISM) to attract companies in peripheral industries for semiconductor manufacturing.
• Reduction of customs duties on components and extension of concessional customs duty on input parts to boost local manufacturing investment.
• Second phase of the PLI scheme for IT hardware with a budgetary outlay of Rs 17,000 crore.

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Deep Tech Focus:

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Launch of a new scheme to strengthen deep tech for the defense sector.

The government has been actively promoting deep tech startups through various measures, including the draft national deep tech startup policy.

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Tax Benefit Extension for IFSC Units:

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Extension of certain tax benefits to startups and investments made by sovereign wealth or pension funds, including tax exemption on specific income of some IFSC units, until March 31, 2025.

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Parting Words

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In conclusion, the 2024 interim budget reflects the government's cautious optimism as it navigates the political landscape leading up to the Lok Sabha election. The focus on 'Viksit Bharat Budget 2024' underscores a vision for a developed India by 2047, and the budget places a strong emphasis on GYAN – addressing the needs of the Garib (Poor), Yuva (Youth), Annadata (Farmer), and Naari (Women).

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In support of various sectors, from defense to startups, the government's initiatives aim to drive growth, innovation, and inclusivity. The extension of tax benefits for startups, credit guarantee schemes, and a focus on electric vehicles underline a commitment to fostering entrepreneurship and technological advancements.