Nirmala Sitharaman Presents Interim Budget For 2024 Pros & Cons

Interim Budget 2024 | Interim Budget For 2024 | Budget 2024 | Nirmala Sitharaman | interim Budget

Introduction : Nirmala Sitharaman Presents Interim Budget For 2024

Finance Minister Nirmala Sitharaman presented the interim budget for 2024, her sixth as the finance minister and the last before the general elections. The interim budget is a temporary financial plan that covers the government’s expenses until a new government takes charge after the elections. The budget speech was delivered in the Lok Sabha on February 1, 2024, at 11 a.m. and was followed by a discussion and voting in both houses of the Parliament.

The budget speech highlighted the Modi government’s 10-year economic performance and its achievements in various sectors such as agriculture, health, education, infrastructure, defense, and social welfare. The budget also announced some relief measures for the common man, such as tax rebates, pension schemes, and subsidies. However, the budget did not propose any major changes in the tax structure or the fiscal deficit, as these are expected to be taken up by the new government after the elections.

In this blog post, we will summarize the key announcements made by the finance minister in the interim budget 2024 and analyze their impact on the economy and the people.

Key announcements interim budget for 2024

Agriculture and rural development

• The budget allocated Rs. 2.83 lakh crore for agriculture and allied sectors, an increase of 16% from the previous year.
• The budget announced a new scheme called Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which will provide Rs. 6,000 per year to small and marginal farmers with land holdings of up to 2 hectares. The scheme will benefit 12 crore farmers and cost Rs. 75,000 crore to the exchequer.
• The budget also announced a 2% interest subvention for farmers affected by natural calamities and an additional 3% interest subvention for timely repayment of loans.
• The budget increased the allocation for the Rashtriya Gokul Mission, which aims to improve the productivity and quality of indigenous cattle breeds, from Rs. 750 crore to Rs. 1,000 crore.
• The budget also announced the launch of a separate department for fisheries, to provide sustained and focused attention to the sector.

Health, education, and social welfare

• The budget allocated Rs. 3.01 lakh crore for health, education, and social welfare, an increase of 13% from the previous year.
• The budget announced a new pension scheme called Pradhan Mantri Shram Yogi Maandhan, which will provide a monthly pension of Rs. 3,000 to unorganized sector workers with a monthly income of up to Rs. 15,000. The scheme will benefit 10 crore workers and cost Rs. 500 crore to the exchequer.
• The budget also announced a hike in the gratuity limit for workers from Rs. 10 lakh to Rs. 20 lakh.
• The budget increased the allocation for the Ayushman Bharat scheme, which provides health insurance cover of up to Rs. 5 lakh per family per year, from Rs. 2,400 crore to Rs. 6,400 crore.
• The budget also increased the allocation for the National Education Mission, which covers various school and higher education schemes, from Rs. 32,334 crore to Rs. 38,572 crore.

Infrastructure and industry

• The budget allocated Rs. 4.56 lakh crore for infrastructure and industry, an increase of 12% from the previous year.
• The budget announced a new scheme called Pradhan Mantri Gram Sadak Yojana-III, which will upgrade 1.25 lakh km of rural roads over the next five years, for Rs. 80,250 crore.
• The budget also announced a 10% reservation for the economically weaker sections in government jobs and educational institutions, which will require an additional 25% of seats to be created.
• The budget increased the allocation for the defense sector from Rs. 2.95 lakh crore to Rs. 3.05 lakh crore, the highest ever.
• The budget also announced a vision for 2030, which outlined 10 dimensions of India’s growth, such as clean and green India, digital India, healthy India, inclusive India, and global India.

Analysis interim budget 2024

Pros interim budget 2024

• The interim budget for 2024 was a populist budget that aimed to woo the voters ahead of the elections. The budget offered several sops to the farmers, workers, middle class, and the poor, which could boost their income and consumption.
• The budget also focused on the social sector, especially health and education, which are crucial for human development and quality of life. The budget increased the spending on flagship schemes such as Ayushman Bharat and the National Education Mission, which could improve the access and affordability of health care and education for the masses.
• The budget also maintained the momentum of infrastructure development, which is vital for economic growth and job creation. The budget allocated more funds for rural roads, railways, and urban development, which could enhance the connectivity and mobility of the people and goods.
• The budget also projected a positive outlook for the economy, with a GDP growth rate of 7.5% for 2024-25 and a fiscal deficit of 3.4% of GDP for 2023-24 and 2024-25. The budget claimed that the government has achieved fiscal consolidation, macroeconomic stability, and structural reforms in the last five years, which have made India the fastest-growing major economy in the world.

Cons interim budget 2024

• The interim budget for 2024 was a pre-election budget that lacked fiscal prudence and long-term vision. The budget announced several schemes and subsidies without specifying the sources of revenue and the impact on the fiscal deficit. The budget also did not address the issues of rising unemployment, agrarian distress, and banking crisis, which are plaguing the economy.
• The budget also lacked any major tax reforms or relief for the corporate sector, which is facing a slowdown in investment and demand. The budget did not reduce the corporate tax rate or the GST rates, which could have boosted the competitiveness and profitability of the businesses. The budget also did not announce any measures to simplify the tax administration or widen the tax base, which could have improved tax compliance and collection.
• The budget also relied on optimistic assumptions and projections, which could be unrealistic and risky. The budget assumed a nominal GDP growth rate of 11.5% for 2024-25, which is higher than the average of 10.6% in the last five years. The budget also assumed a tax revenue growth rate of 14.4% for 2024-25, which is higher than the average of 12.8% in the last five years. The budget also assumed a non-tax revenue growth rate of 22.6% for 2024-25, which is higher than the average of 9.6% in the last five years. These assumptions could be difficult to achieve, given the global and domestic uncertainties and challenges.

Conclusion

The interim budget for 2024 was a mixed bag of promises and performance, which tried to balance the political and economic objectives of the government. The budget offered some relief and incentives to the common man, especially the farmers, workers, and the middle class, who were the key vote banks for the ruling party. The budget also highlighted the achievements and vision of the government, which aimed to showcase its track record and agenda for the future.

However, the budget also lacked fiscal discipline and structural reforms, which could have addressed the underlying problems and challenges of the economy. The budget also depended on optimistic assumptions and projections, which could be unrealistic and risky. The budget, therefore, was more of a political statement than an economic document, which left the hard decisions and choices for the next government.