Sure of Modi 3.0, FM shuns populist path

Tribune News Service

Sandeep Dikshit

New Delhi, February 1

The Interim Budget presented by Finance Minister Nirmala Sitharaman on Thursday maintained the pace of expansion in capital expenditure for infrastructure sectors as well as provided healthy outlays for social sectors, but left the middle class disappointed due to the absence of any changes in tax slabs.

Editorial: Pragmatic Budget

Stating that every challenge of the pre-2014 era was overcome through economic management and governance, she said the government, in its July Budget, would present a detailed roadmap to make India a developed country. “We continue on the path of fiscal consolidation, as announced in my Budget speech for 2021-22, to reduce the fiscal deficit below 4.5 per cent by 2025-26,” Sitharaman said.

• No change in tax slabs; focus on infra with 11% hike in spending
• Housing plan for middle class soon; 2 cr more houses under Awas Yojana
• For youth, Rs 1 lakh cr corpus to be set up with 50-year interest-free loan

The total expenditure in the Interim Budget 2024-25 has been proposed at Rs 47.65 lakh crore as against actuals of Rs 44.90 lakh in 2023-24, an increase of Rs 2.75 lakh crore. For states, it proposes Rs 1.3 lakh crore for 50-year loans for boosting their capital investments for next fiscal year. The sole sop for the middle class was a promise to launch a scheme for those of them “living in rented houses, slums or unauthorised colonies to buy or build their houses”. Another promise is for the tech-savvy youth for whom a corpus of Rs 1 lakh crore will be established with 50-year interest-free loan.

Key takeaways

Tax benefits to startups and investments made by sovereign wealth or pension funds extended by 1 year till March 31, 2025

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Capital expenditure hiked 11% to Rs 11.11 lakh cr

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Fiscal deficit for 2024-25 projected at 5.1%, lower than 5.8% this fiscal

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Govt to borrow Rs 14.13 lakh cr in the next fiscal, lower than Rs 15.43 lakh crore in 2023-24

Nominal GDP for 2024-25 projected at 10.5%

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Gross tax revenue target for 2024-25 hiked by 11.46% to Rs 38.31 lakh cr from Rs 34.37 lakh cr in the current financial year

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Direct tax collection target set at Rs 21.99 lakh cr and the indirect tax target at Rs 16.22 lakh cr

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Interest-free loan scheme of 50 years for states for capital expenditure to be continued next year with an outlay of Rs 1.3 lakh cr

There was no announcement either on inclusion of middle class and non-health insured people in the scope of Ayushman Bharat scheme which, however, has been extended to all Asha and Anganwadi workers. Under the PM Awas Yojana, two crore more houses will be built while one crore households will get up to 300 units of electricity every month with rooftop solarisation, announced Sitharaman.

Estimated expenditure for

2024-25 Rs 47.65 lakh cr

2023-24 Rs 44.9 lakh cr

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Realising dream of ‘Viksit Bharat’

The next 5 years will be years of unprecedented development and golden moments to realise the dream of developed India by 2047. This is a budget of creating India’s future. — Nirmala Sitharaman, Finance minister

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1 cr to benefit as tax demands to be waived

• The government has withdrawn income tax demands up to Rs 25,000 till 2009-10
• Demands up to Rs 10,000 from 2010-15 also withdrawn
• Move to benefit 1 cr taxpayers as Rs 3,500 cr dues to be waived

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Markets turn choppy; Sensex drops 106.81 pts

However, there was relief for the large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating back to 1962. Sitharaman announced the withdrawal of 1.1 crore outstanding small direct tax demands of less than Rs 25,000 crore. The government’s main push to the economy in the form of capital expenditure has been hiked to Rs 1.11 lakh crore from Rs 1 lakh crore in the current fiscal. “This reflects the continuing strong commitment of the Union Government to boost economic growth by investing in infrastructure development, leading to an increase in capital expenditure by 16.9 per cent over 2023-24,” observed Sitharaman at a press conference.

Effective capital expenditure, at Rs 14.96 lakh crore, shows an increase of 17.7 per cent over 2023-24, she said. The major sectors once again targeted by the government are road transport (Rs 2.78 lakh crore) and railways (Rs 2.55 lakh crore).

A major announcement in this respect was three new railway freight corridors for energy, metals and cement. But the implementation of the dedicated freight project is lagging behind the target. Despite optimistic claims about growth, the government is not anticipating substantial GDP momentum in the next fiscal year with a target of 6.5 to 7 per cent GDP growth in 2024-25.

In the social sector, the government kept most of the outlays intact, including for drinking water mission, PM Awas Yojana, MGNREGA and pensions for the old and the widowed. Similarly, it largely maintained the massive subsidies for food and public distribution and fertilisers, which together amounted to almost Rs 4 lakh crore. The health outlay at Rs 90,658 crore (Rs 89,155 crore in 2023-24) has slipped in real terms due to inflation.

For women and child welfare schemes, Sitharaman said several programmes will be brought under the ambit of a larger scheme. The fiscal deficit target for 2024-25 has been set at a lower 5.1 per cent of GDP as against 5.9 per cent in 2023-24, which has been revised to 5.8 per cent. To fund this gap between revenue and expenditure, the government will borrow a gross of Rs 14.13 lakh crore in 2024-25 as against Rs 15.43 lakh crore in 2023-24.

The tightening of deficit and lower borrowing target led to a sharp fall in 10-year benchmark yields. In order not to borrow more, the government will roll over debt of Rs 1 lakh crore and raise Rs 4.66 lakh crore by small savings fund. The disinvestment target was again a failure although two months still remain for the fiscal year to close. The target for 2024-25 fiscal is kept again at Rs 50,000 crore though in this fiscal, the government could raise only Rs 12,504 crore so far. No money at all accrued from monetisation of public assets in the current fiscal as against the target of Rs 10,000 crore.

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