Finance Minister Nirmala Sitharaman presented the interim budget for fiscal year 2024-25 today. The interim budget has dominated economic conversation in India.
The budget address, delivered in about one hour, gave insights into the government's budgetary aims, methods, and important economic estimates. As the country awaits the full-fledged budget presentation in July following the elections, Sitharaman's interim budget outlines immediate actions and establishes the economic direction for the coming months.
Here are the key pointers from the interim budget mentioned by FM Sitharaman:
1. Nominal GDP Growth: As the foundation of every budget, the government expects nominal GDP growth of 10.5% in fiscal year 2024-25. This basic variable determines real GDP growth after accounting for inflation, and it is critical in determining overall economic success.
2. Fiscal Deficit Reduction: One major result is the lowering of the fiscal deficit to 5.8% of GDP, which exceeded previous projections. The Finance Minister set lofty expectations for the coming fiscal years, aiming for additional reductions to 5.1% and 4.5% of GDP in 2024-25 and 2025-26, respectively.
3. Capital Expenditure objective Not Met: Despite last year's emphasis on higher capital expenditure, the government fell short, with actual spending of Rs 9.5 lakh crore vs the objective of Rs 10 lakh crore. This gap helps to reduce the budget deficit but raises concerns about the possible impact on economic growth.
4. Cuts in Health and Education Spending: Allocations for the health and education sectors were reduced in the revised projections for the current fiscal year, raising worries about the government's commitment to these key areas.
5. Allocation Cuts for disadvantaged Sections: Allocations for core programs for disadvantaged groups, such as SCs, STs, and minorities, have been reduced. This raises concerns about the sustainability of social welfare policies and their effects on disadvantaged populations.
6. Income Tax as the Primary Revenue Source: Income tax receipts are expected to account for 19% of total government resources in fiscal year 2024-25, indicating a substantial shift in revenue dynamics.
As the interim budget serves as a forerunner to the complete budget presentation later in the year, looking into these important issues is critical for understanding India's current economic goals and the tactics that will shape its fiscal trajectory.
We spoke to women leaders from across India to hear their thoughts on the Interim budget. Here is what they had to say:
N. Parvathi Reddy, FICCI FLO Young Leader and Co-Founder and Executive Director at NAR Infra Pvt
“Budget, though interim, has a long-term view. It is a forward-looking budget. It laid down the long-term vision of the government. Nirmala Seetharamn reemphasised the importance of innovation. She said innovation is the foundation of development. Accordingly, she provided provisions in the budget. For continuity, the FM extended tax exemptions to Startups working in the space of IFSC. Retained tax rates for direct and indirect taxes. The budget made provisions for the empowerment of Women, Children, Youth and Farmers, which is most welcome. The budget also gave a fillip to skill development, upskilling and reskilling. The Minister announced plans to take up projects for port connectivity in island territories.
On the Tourism front, setting up of development centres, encouragement to promote India as a MICE destination, boosting spiritual tourism, long-term interest-free loans to states to develop tourism centres and conversion of 40,000 rail bogies to Vande Bharat Standards are some of the laudable initiatives proposed in the budget.
Setting up a corpus of Rs 1 lakh crore with 50-year interest-free loans for sunrise domains is a step towards the future-oriented economic development of the country.
The budget was women-friendly budget. Extension of Ayushman Bharath to all Asha and Anganwadi workers, bringing maternal, and child care health schemes under one plan, and plans to allocate 70% of houses to women in rural areas under the PM Awas Scheme are some of the steps towards women's welfare. It announced that it would launch a new housing scheme for the middle class. The Minister also stated the government will build 20 million rural houses in the next five years. It is a progressive step ensuring housing for all.
All in all, it is a forward-looking budget. Though it was anticipated that the Finance Minister would announce some soaps in income tax that has not happened. It has also a long time demand the GST Amnesty was expected, but that too has not been addressed. Hope these will be looked into as well as some measures to encourage schools and education when a full budget is proposed in July by a successive government.”
Shabnum Khan, Mandrake Mydia and 750AD Healthcare Pvt. Ltd.-
"In the vibrant realm of India's burgeoning startup ecosystem, the Union Budget 2024-25 resonates with our unwavering commitment to nurturing entrepreneurship, fostering innovation, and driving inclusive growth. The PM Mudra Yojana exemplifies empowerment, having dispersed thirty crore loans to women entrepreneurs, catalyzing their journey towards economic independence.
Furthermore, the budget's spotlight on the remarkable surge in female enrolment in higher education, coupled with their significant representation in STEM courses, underscores our dedication to fostering gender equality and nurturing talent, essential pillars for sustainable growth.
While celebrating these achievements, it's imperative to acknowledge the need for some relaxation in the tax regime for startups and small businesses. Such measures would not only incentivize risk-taking but also bolster the entrepreneurial spirit, driving further innovation and growth in our dynamic startup landscape.”
Radhika Kalia, Managing Director, RLG Systems India Private Limited
“I would say that the Interim Budget 2024 presented today announced several steps to uplift and encourage women’s entrepreneurship, which is truly welcome. The disbursement of Rs. 30 crore as loans under the PM Mudra Yojana to women entrepreneurs would help women entrepreneurs achieve financial independence and a better quality of life. It is also a positive step to ensure inclusive growth across sectors. The budget further emphasizes the importance of upskilling women through vocational programs after class 12. The government has also displayed focus on agricultural technology and women empowerment, and promoting participation of women in the workforce. I feel these initiatives would help promote inclusivity and empowerment of women in India.”
Prasanna Anireddy, VP of Engineering, Product Development at Progress, Ms. Nirmala’s speech on 43% female enrolment in STEM courses is one of the highest in the world.
“Finance Minister Sitharaman's post-budget declaration brings promising news for our education system. The revelation that 43% of girls and women are now enrolled in STEM courses positions India among the global leaders in fostering gender diversity in scientific and technological fields. This positive trend shows a significant stride as more women embrace opportunities in science and technology. While acknowledging the progress achieved, I hope also to witness a surge in the number of women not just in academic settings but also in workplaces. Today's budget transcends mere numerical allocations; it is a commitment to ensuring equal opportunities for everyone, irrespective of gender, fostering a more inclusive and vibrant future. The increasing contribution of women to our workforce serves as a tangible indicator of the positive transformations underway, propelling our nation towards greater inclusivity and progress.”
