GS Paper III

News Excerpt: Ahead of the 2024 general elections, the government presented its interim budget on February 1.

Key Highlights of the Interim Budget:

Budget Breakdown:

• The size of Budget 2024-25 has increased 6.1 % to Rs 47.66 lakh crore because of a rise in expenditure and higher allocation for capital expenditure and social sector schemes.

• The graphic shows the sector-wise budgeted expenditure (₹ crore) in FY25. The bigger the rectangle, the higher the proposed spending in FY25.
• It also shows the change in a sector's share in total expenditure from FY24 (revised estimates). 
• The deeper the blue, the higher the increase in share from FY24. The deeper the red, the higher the decrease in share from FY24.

Rural employment scheme:

• With allocation of ₹86,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the budget for the scheme for the financial year 2024-25 has been hiked by ₹26,000 crore in comparison to the 2023-24 Budget estimates.
• It is the same as the revised estimates for the ongoing financial year (2023-24). So, the net gain for the rural employment scheme could be zero or even negative.

Housing:

• Budget Allocation for Housing: The total allocation to the Housing and Urban Affairs Ministry for 2024-25 is ₹77,523 crore, up from ₹76,431 crore in 2023-24. The total allocation for PMAY is ₹80,671 crore out of which ₹54,500 crore is for PMAY (Rural).

• Empowering the Middle Class: Government will launch a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” to buy or build their own houses.
• Rooftop solarization:  1crore households will be able to obtain up to 300 units of free electricity every month.
• PM Awas Yojana (Grameen):  Two crore more houses will be taken up in the next five years to meet the requirement arising from increased number of families.

Health:

• Budget for Health and Family Welfare: While a full budget for 2024-25 will be announced after the new government is formed following the Lok Sabha elections later this year the budget allocation saw an increase from ₹89,155 crore in 2023-24 to ₹90,658.63 crore for the Ministry of Health and Family Welfare while Ayush Ministry also saw a hike from ₹3,647.50 crore to ₹3,712.49 crore.
• Promotion of HPV Vaccination: The other major additions in the sector includes utilising the existing hospital infrastructure under various departments to offer medical seats to students and encouraging HPV vaccination for girls in the age group of 9 to 14 years for prevention of cervical cancer.
• Integration of Maternal and Childcare Schemes: The government also proposed to combine various schemes for maternal and child care and bring them under one comprehensive programme for synergy.
• Expansion of Medical Colleges: Government plans to set up more medical colleges by utilizing the existing hospital infrastructure under various departments.
• Upgradation of Anganwadi Centres: “Saksham Anganwadi and Poshan 2.0” will be expedited for improved nutrition delivery, early childhood care and development.
• U-WIN platform for managing immunization and intensified efforts of Mission Indradhanush will be rolled out expeditiously.
• Health cover under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana will be extended to all Accredited Social Health Activists (ASHA) and Anganwadi workers and helpers.
• Extension of healthcare cover under the Ayushman Bharat scheme to all ASHA workers, Anganwadi Workers and Helpers.

Smaller pie for the social sector: Outlays to most schemes under school education, higher education and rural development in the total budget remained relatively low compared to the pre-pandemic years. Only PMAYG and NRLM recorded a considerable increase.

Social Justice & Tribal Affairs: 

• Budget Allocation for Social Justice and Empowerment Ministry: The Ministry of Social Justice and Empowerment has been allocated ₹14,225 crore for the fiscal year 2024-25. Despite a reduction in expenditures by 23% in the Revised Estimates for FY 2023-24, this budget indicates a renewed focus on social justice initiatives.
• Allocation for Ministry of Tribal Affairs: The Ministry of Tribal Affairs is set to receive ₹13,000 crore for the upcoming fiscal year, demonstrating a commitment to the welfare of tribal communities. The Revised Estimates for FY 2023-24 showed a 38% reduction in expenditures compared to the allocated funds.
• Challenges in Expenditure for Social Justice Ministry: The Social Justice Ministry faced challenges in utilizing allocated funds for key schemes such as the SEED scheme, National Action Plan for Drug Demand Reduction, and NAMASTE scheme during FY 2023-24. The Revised Estimates highlighted lower spending percentages for these crucial initiatives.
• Spending Shortfalls in Tribal Affairs Ministry: The Tribal Affairs Ministry also experienced spending shortfalls in FY 2023-24, particularly concerning flagship projects like the Eklavya Model Residential Schools (EMRS) and transfers to States under the PM Adi Adarsh Gram Yojana.
• PM-JANMAN Programme for Particularly Vulnerable Tribal Groups (PVTGs): Launched in November 2023, the PM-JANMAN programme received an allocation of ₹240 crore under the transfers to States head, with an additional ₹25 crore earmarked for the Central sector component under the Tribal Affairs Ministry. This initiative targets the welfare of Particularly Vulnerable Tribal Groups.
• Reductions in Allocations for Key Schemes: The government has reduced allocations for the Free Coaching Scheme for Scheduled Castes and Other Backward Classes by over ₹12 crore in FY 2024-25. Additionally, the Pradhan Mantri Janjatiya Vikas Mission (PMJVM), focusing on forest produce self-help groups, witnessed a reduction of over ₹110 crore compared to the FY 2023-24 estimates. These reductions raise questions about the continuity and effectiveness of these programs in the coming fiscal year.

Education:

• The 2024 Budget outlines significant strides in the government's efforts to enhance the skills of today's youth. 

• The total allocation for the School Education Department is ₹73,008.10 crore. In the previous Budget, it was ₹68,804.85 crore, while in the Revised Estimates, the amount was ₹72,473.80 crore.

•  The actual expenditure in 2022-23 was ₹58,639.56 crore. The Pradhan Mantri Poshan Shakti Nirman (PM POSHAN), previously known as the mid-day meal scheme, received an outlay of ₹12,467.39 crore. For PM SHRI, the allocation is ₹6,050 crore.

• For Samagra Shiksha Abhiyan allocation increased marginally by Rs 46.5 crore, from Rs 37,453.47 crore to Rs 37,500 crore in 2024-25.

• The total allocation for the Higher Education Department is ₹47,619.77 crore. In the previous Budget, it was ₹44,094.62 crore. In the Revised Estimates, it went up to ₹ 57,244.48 crore. The actual expenditure in 2022-23 was ₹ 38,556.80 crore. 

• Allocation for the World Class Institutions’ for Institutions of Eminence (IoE) has increased from Rs 1,500 crore in 2023-24 to Rs 1,800 crore in 2024-25.
• PM Schools for Rising India (PM SHRI): A dedicated budget of Rs 6,050 crore is earmarked for the PM Schools for Rising India (PM-SHRI).

Agriculture and related sectors:

• Increased Allocation for Agriculture Ministry: The allocation for the Agriculture Ministry is ₹1,17,528.79 crore, an increase of ₹1,997 crore when compared with the previous Budget.
• Differential Allocation for Agricultural Schemes: While schemes like the Pradhan Mantri Fasal Bima Yojana saw an increase in allocation, the allocation under the PM Kisan Samman Nidhi remained the same at ₹60,000 crore. The PM Kisan Man Dhan Yojana, however, saw a decrease in allocation.
• Fluctuations in Fertilizers Department Allocation: Allocation for the Fertilisers Department in this Budget is ₹1,64,150.81 crore. It was ₹1,75,148.48 crore in the last Budget. In the Revised Estimates of the last financial year, it was ₹1,88,947.29 crore.
• Application of Nano DAP on various crops will be expanded in all agro-climatic zones.

• Strategic Focus on Oil Seeds: A strategy will be formulated to achieve ‘atmanirbharta’ for oil seeds. Focussed oil seeds: mustard, groundnut, sesame, soybean, and sunflower.
• Programme for Dairy Farmers: A comprehensive programme for supporting dairy farmers will be formulated. The success of existing schemes such Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry will act as guiding light for such a programme.
• Enhanced Implementation of PM Matsya Sampada Yojana: Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY), according to the speech, will be stepped up to:
  • Enhance aquaculture productivity from existing 3 to 5 tons per hectare
  • Double exports to 1 lakh crore
  • Generate 55 lakh employment opportunities in near future.”
• Establishment of Integrated Aquaparks: A strategic move involves setting up five integrated aqua parks, emphasizing the commitment to the growth and development of the fisheries sector.

Food subsidies:

• Food subsidy has seen an increase in the allocation compared to the last year. 
• The total food subsidy includes ₹2,05,250 crore for the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) and ₹1 lakh crore for the Sugar Subsidy payable under Public Distribution System. 
• In the last Budget, the amount was 1,97,350 crore, while in 2022-23, the actual expenditure was ₹2,72,802.38 crore.

Women:

• Priority Allocations for Women Empowerment Programs: The Saksham Anganwadi and POSHAN 2.0 programmes saw the highest allocation of funds at ₹21,200 crore, followed by the Mission Shakti (Mission for Protection and Empowerment for Women) which has been given ₹3,145.97 crore.

• Marginal Increase in Budget for Women and Child Development Ministry: The total allocation for the Women and Child Development Ministry for 2024-25 is ₹26,000 crore, a marginal increase of 2.52% from the previous year’s budget.

• Expansion of 'Lakhpati Didi' Scheme Target: Buoyed by its success, the Centre has decided to increase the target for ‘Lakhpati Didi’ scheme, which aims to train women’s Self Help Groups (SHGs) to earn a sustainable income of at least ₹1 lakh per annum by setting up micro-enterprises within their villages. The government aims to enhance the target for Lakhpati Didi from 2 crore to 3 crore.

• 30 crore Mudra Yojana loans disbursed to women entrepreneurs.

• 43 percent of female enrolment in STEM courses.
• Increased female enrolment in higher education by 28 percent in 10 years.

Youth and Technology:

• For the tech savvy youth — A corpus of rupees one lakh crore will be established with fifty-year interest free loan.
• The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates.
• A new scheme will be launched for strengthening deep-tech technologies for defence purposes and expediting ‘atmanirbharta’.

Infrastructure Development:

• Capital expenditure outlay: The government announced that the capital expenditure outlay for the next year is being increased by 11.1%  to Rs 11,11,111 crore, which would be 3.4%  of the GDP.

• Boost in Railways Allocation for Infrastructure: With a thrust on investment in infrastructure, the Union Ministry of Railways has been allocated ₹2.55 lakh crore for the financial year 2024-25, up by 5.8% from last year’s allocation of ₹2.41 lakh crore.
• Three major economic railway corridor programmes will be implemented. These are:
• Energy, mineral and cement corridors
• Port connectivity corridors
• High traffic density corridors.
• The projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity.
• Road Sector Allocation: After a massive jump in allocation every consecutive year in the recent past, this year’s budgetary allocation for the road sector saw a measly 2.7% increase.
• The Interim Budget set aside ₹2,78,000 crore for the Ministry of Road Transport and Highways as compared to the ₹2,70,434 crore in the budget estimate for this fiscal. When compared to the revised estimate of ₹2,76,351 crore, the allocation is a hike of a mere 0.5%.
• Of the total budgetary grant, ₹1,68,464 is for investment in NHAI for the development of national highway corridors under Bharat Mala Pariyojana.
• Separately, a sum of ₹78,349 crore has been set aside for road works, which includes six landing of crowded sections of the Golden Quadrilateral, road development in Naxal-hit areas and provisioning of last-mile connectivity through State government’s Public Works Department.

• Reduction in UDAN Scheme Allocation: The budgetary allocation for the regional connectivity scheme UDAN (Ude Desh Ka Aam Nagrik) has been slashed by 60% after a record-high grant last time. The fund is spent on reviving unused and underused airports in tier-2 and tier-3 cities.
• The government has set aside ₹502 crore for the scheme compared with the previous Budget Estimate (BE) of ₹1,244 crore, which was also the highest-ever allocation for the scheme since its launch in 2017.
• Expansion of Metro and NaMO Bharat will be supported in large cities focusing on transit-oriented development. 

Ups and downs in infra outlay:

Allocation for Railways, Road Transport, and Telecom Ministry as a share of budget continued to be high this year. On the other hand, the allocation for schemes such as PMAY-Urban, smart cities mission, AMRUT and Regional Connectivity Scheme-Udan remained low.

Research and development:

• Signalling a commitment to research and innovation for India’s “tech-savvy youth,” Finance Minister mentioned a corpus of ₹1 lakh crore, that would be available on ‘minimal or nil interest rates’ to “encourage” the private sector to invest in research and development in ‘sunrise sectors.’ 

Space missions:

• With no major space missions slated for 2024, the Department of Space has received only a nominal hike of 4% in its allocation in the Interim Union Budget for 2024-25, from ₹12,545 crore to ₹13,043 crore. 
• The Indian space programme will spend much of the year on pre-launch testing milestones for the lunar exploration (Chandrayaan) and human spaceflight (Gaganyaan) missions, and some other projects.

Defence:

• Total allocation for the Ministry of Defence stands at ₹6.2 lakh crore for 2024-25, which is 13.04% of the total Union Budget presented.
• The allocation of ₹6.2 lakh crore is 4.72% higher compared to the Budget Estimates (BE) and marginally lower, -0.38%, than the Revised Estimates (RE) for 2023-24 and is 13.04% of the total Union Budget presented.
• On the capital allocation, the Ministry said that this was in line with the Long Term Integrated Perspective Plan (LTIPP) of the three Services aimed to fill the critical capability gaps through modernisation of the armed forces by “materialising some big ticket acquisitions in FY 2024-25.

Environment and Green Energy:

• Viability gap funding will be provided for harnessing offshore wind energy potential.
• Coal gasification and liquefaction capacity of 100 MT will be set up by 2030.
• Financial assistance will be provided for procurement of biomass aggregation machinery.
• Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be mandated.
• Electric Vehicle Ecosystem– Support for manufacturing and charging infrastructure.
• Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanisms.
• For promoting green growth, a new scheme of bio-manufacturing and bio-foundry will be launched.
• The announcement is part of a bid to have the bioeconomy contribute $300 billion to the Indian economy by 2030, representing a jump of about ₹18 lakh crore in value from current levels, and $1 trillion by 2047.
• The new bio-manufacturing scheme “will also help in transforming today’s consumptive manufacturing paradigm to the one based on regenerative principles.
• Blue Economy 2.0 - A scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with integrated and multi-sectoral approach will be launched.

Tourism:

• States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them at global scale.
• A framework for rating of the centres based on quality of facilities and services will be established.
• Long-term interest-free loans will be provided to States for financing such development on a matching basis.
• For domestic tourism— projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands. It will also include Lakshadweep.
• G20 meetings in 60 places presented the diversity of India to a global audience. 

FDI:

• The FDI inflow during 2014-23 was USD 596 billion marking a golden era. That is twice the inflow during 2005-14.
• For encouraging sustained foreign investment– Negotiating bilateral investment treaties with foreign partners, in the spirit of ‘first develop India’.

Population Growth and Demographic changes:

• The Government will form a high-powered committee for an extensive consideration of the challenges

Reforms in the States:  

• A provision of seventy-five thousand crore rupees as a fifty-year interest-free loan is proposed this year to support reforms by the State Governments.

India’s neighbourhood: The government has reduced its overall allocation for aid to foreign countries for the forthcoming fiscal year by 10 per cent. This amount is a substantial share of the annual allocation under the Ministry of External Affairs for the 2024-25 interim budget.

• Bhutan: It emerges as a significant beneficiary, receiving ₹2,398.97 crores for the current fiscal year, highlighting the two nations' deepening ties and developmental support.
• Nepal: It secures the second-highest allocation among the neighbouring countries, with ₹650 crores dedicated to various ongoing development projects. For the fiscal year 2024-25, Nepal's allocation increases to ₹700 crores.
• Maldives: Despite recent challenges, the Maldives witnessed a substantial increase in allocation, rising from ₹400 crores in 2023-24 to ₹770.90 crores, indicating India's commitment to enhancing investments in the archipelago nation.
• Bangladesh: Indian projects in Bangladesh receive a notable allocation of ₹130 crores for the current fiscal year, reflecting the ongoing collaboration between the two countries in various development initiatives.
• Afghanistan: Despite the challenges in recognition, ₹220 crores are allocated for Afghanistan, demonstrating India's commitment to supporting the people of Afghanistan through developmental assistance.
• Sri Lanka and Myanmar: Sri Lanka is allocated ₹60 crores for the current fiscal year, while conflict-stricken Myanmar receives ₹370 crores, underscoring India's engagement in addressing the needs of its neighbouring countries.
• Development Support for Indian Ocean Island Nations: Among the Indian Ocean island nations, Seychelles and Mauritius receive allocations of ₹9.91 crores and ₹370 crores respectively, emphasizing India's collaborative efforts in the region.
• Funding for Chabahar Port in Iran: The port of Chabahar in Iran is allocated ₹100 crores as funding, showcasing India's commitment to enhancing connectivity and trade through strategic projects.
• Lines of Credit: A substantial amount of ₹3,849 crores is allocated for Lines of Credit under the Indian Development and Economic Assistance Scheme, indicating India's support for economic development and assistance to its neighbouring nations.

Revised Estimates 2023-24:

• The Revised Estimate of the total receipts other than borrowings is Rs. 27.56 lakh crore, of which the tax receipts are 23.24 lakh crore.
• The Revised Estimate of the total expenditure is Rs. 44.90 lakh crore.
• The revenue receipts at Rs. 30.03 lakh crore are expected to be higher than the Budget Estimate.
• The Revised Estimate of the fiscal deficit is 5.8% of GDP.

Budget Estimates 2024-25:

• The fiscal deficit in 2024-25 is estimated to be 5.1% of GDP, adhering to that path.
• The scheme of a fifty-year interest-free loan for capital expenditure to states will be continued this year with a total outlay of Rs. 1.3 lakh crore.
• The total receipts other than borrowings and the total expenditure are estimated at Rs. 30.80 and 47.66 lakh crore respectively.
• The tax receipts are estimated at Rs. 26.02 lakh crore.

TAXATION:

The Interim Budget for 2024-25 did not propose any changes in existing taxation

Direct taxes:

• Rapid Growth in Direct Tax Collections and Filer Increase: Over the last ten years, the direct tax collections have more than trebled and the return filers swelled to 2.4 times.
• Expanded Tax Relief for Low-Income Earners: Under the new tax scheme, there is now no tax liability for taxpayers with income up to Rs. 7 lakh, up from Rs. 2.2 lakh in the financial year 2013-14.
• Presumptive Taxation Threshold Adjustments: The threshold for presumptive taxation for retail businesses was increased from Rs. 2 crore to Rs. 3 crore.

• • The threshold for professionals eligible for presumptive taxation was increased from Rs. 50 lakh to Rs. 75 Lakh.
• Corporate Tax Rate Reductions: Corporate tax rate was decreased from 30 % to 22 % for existing domestic companies and to 15 % for certain new manufacturing companies.

ON TAX PAYER SERVICES:

• Transformation to Faceless Assessment and Appeal System: The age-old jurisdiction-based assessment system was transformed with the introduction of Faceless Assessment and Appeal, thereby imparting greater efficiency, transparency and accountability.
• Simplified Tax Filing Processes: Introduction of updated income tax returns, a new Form 26AS and prefilling of tax returns have made filing of tax returns simpler and easier.
• Reduced Return Processing Time and Faster Refunds: Average processing time of returns has been reduced from 93 days in the year 2013-14 to a mere ten days this year, thereby making refunds faster.

TAX PROPOSALS:

Indirect Taxes: 

• GST has reduced the compliance burden on trade and industry benefitting the consumers as reduction in logistics costs led to a decline in prices of almost all goods and services.
• Tax base of GST more than doubled.
• The average monthly gross GST collection has almost doubled to Rs. 1.66 lakh crore.
• States’ SGST revenue, including compensation released to states, in the post-GST period of 2017-18 to 2022-23, has achieved a buoyancy of 1.22 as compared to a mere 0.72 in pre-GST four-year period.

A number of steps were taken in Customs to facilitate international trade.

Government’s earnings and spending:

Fiscal roadmap:

The government’s  aim to restrict the fiscal deficit to 5.8 %  of the Gross Domestic Product (GDP) as against 5.9 %  budgeted earlier for the financial year and the push to restrict the fiscal deficit tar- get to below 4.5 per cent by 2025-26 rides on the back of a strong buoyancy in tax revenues.

Allocation for Specific Ministries:

Conclusion:

The 2024 Interim Budget reflects the government's vision for the transitional phase, striking a balance between continuity and the need for flexibility. It addresses critical sectors such as rural employment, health, education, and infrastructure while navigating the complexities of an election year. As the political landscape evolves, these fiscal decisions will shape the economic trajectory of India, impacting the lives of its citizens for years to come.