Budget 2024 25 Summary 1706888004

BUDGET
2024-25
SUMMARY
BY
ECONOMICS CLUB
Interim Budget 2024-25
Since this is an election year, only an interim
budget was presented. An interim budget , also
known as vote on account essentially means
that the government seeks the approval of
Parliament for meeting expenditure for the first
four months of the fiscal year (April-March) —
paying salaries, ongoing programmes in various
sectors etc — with no changes in the taxation
structure, until a new government takes over
and presents a full Budget that is revised for the
full fiscal. The reasoning is that there is little
time to get approvals from Parliament for
various grants to ministries and departments,
and to debate these as well as any provisions for
changes in taxation. More importantly, the
reasoning is that it would be the prerogative of
the new government to signal its policy
direction, which is often reflected in the Budget.
BUDGET AT GLANCE
BUDGET AT GLANCE
BUDGET AT GLANCE
BUDGET AT GLANCE
BUDGET AT GLANCE
BUDGET PROFILE
HIGHLIGHTS
1. Housing: 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 — one crore
households will be enabled to obtain up to
300 units 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
increase in the number of families.
2. Health
Vaccination for girls in age group of 9 to 14
years for prevention of cervical cancer.
Government plans to set up more medical
colleges by utilizing the existing hospital
infrastructure under various departments.
Extension of healthcare cover under
Ayushman Bharat scheme to all ASHA
workers, Anganwadi Workers and Helpers.
3. Agriculture
Application of Nano DAP (nanotech in
fertilizers) on various crops will be expanded
in all agro-climatic zones.
A strategy will be formulated to achieve
‘atmanirbharta’ for oil seeds. Focused oil
seeds: mustard, groundnut, sesame, soybean,
and sunflower.
4. Infrastructure
Three major economic railway corridor
programs will be implemented. These are:
a. energy, mineral and cement corridors
b. port connectivity corridors,
c. high traffic density corridors.
The outlay for the next year is being
increased by 11.1 per cent to eleven lakh,
eleven thousand, one hundred and eleven
crore rupees (` 11,11,111 crore). This would be
3.4 per cent of the GDP.
5. 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
Electric Vehicle Ecosystem– Support to
manufacturing and charging infrastructure
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
6. Tax
Tax slabs stay the same
Collections have trebled in last 10 years, 2.4
times tax filers in last 10 years
Reduction in tax return time from 93 days in
2014 to 10 days
7. Revised estimates
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 per cent of GDP
8. Others
Government will form a high-powered
committee for an extensive consideration of
the challenges arising from fast population
growth and demographic changes
Nirmala Sitharaman said that for the tech
savvy youth, this will be a golden era. 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. This will encourage the private
sector to scale up research and innovation
significantly in sunrise domains
PM-SVANidhi has provided credit assistance
to 78 lakh street vendors. From that total, 2.3
lakh have received credit for the third time
KEY TAKEAWAYS
1. Muted expectations from nominal GDP
growth: Nominal GDP is the fundamental
variable in any Budget. The real GDP growth
that is commonly talked about is derived
from nominal GDP growth after removing the
effect of inflation. So, if nominal GDP growth
in a particular year is 12% and inflation is 4%,
then the real GDP growth will be 8%. For the
coming financial year (2024-25), the
government expects the nominal GDP to
grow by 10.5%. According to the latest
Budget documents, the government projects
India’s nominal GDP to be Rs 3,27,71,808
crore, assuming 10.5 % growth over the
estimated nominal GDP of Rs 2,96,57,745
crore in the current financial year (2023-24).
2. Significant reduction in fiscal deficit: Fiscal
deficit essentially shows the amount of
money that the government borrows from
the market. It does so to bridge the gap
between its expenses and income. Fiscal
Deficit is the most watched variable because
if a government borrows more, it leaves a
smaller pool of money for the private sector
to borrow from. That, in turn, leads to higher
interest rates, which, further drags down
economic activity. In the run-up to the
Budget, analysts expected the government to
bring down the fiscal deficit to 5.9% of the
GDP. The FM did slightly better by announcing
that the fiscal deficit has been brought down
to 5.8% level. Further, the FM announced
similarly ambitious targets for the FY25 — at
5.1% of GDP— and FY26 — at 4.5% of GDP.
While this is welcome news, it leads to two
questions: how is fiscal consolidation being
achieved, and what will be its impact on
growth.
3. Capital expenditure target not met

The cornerstone of last year’s Budget
presentation was the spike in capital
expenditure by the government. The
government received a lot of praise for raising
capex target to Rs 10 lakh crore. But the data
for Revised Estimates shows that the capex
was not met; it stands at Rs 9.5 lakh crore. This
explains some part of the reduction in fiscal
deficit. Capex from the government will
continue, it is important to continue it, FM
said.
4. Cuts in health and education spending

Health and education budget allocations are
typically much lower than what India needs
but the revised estimates show that even
those targets have not been met in the
current financial year. The government was
supposed to spend Rs 1,16,417 crore on
education but ended up spending Rs 1,08,878
crore. Similarly on health, it budgeted an
expenditure for Rs 88,956 crore but actually
spent only Rs 79,221 crore.
5. Cuts in core schemes for the marginalized

sections: Similar cuts can be seen in the
allocation for the core schemes for
marginalized sections such as SCs, STs, and
minorities. For instance, the Revised Estimates
(RE) for the Umbrella Scheme for
Development of Schedule Castes are Rs 6,780
crore against the Budget Estimates (BE) of
Rs.9,409 crore. For STs, the RE is Rs 3,286
crore against a BE of Rs 4,295 crore.
For minorities, the fall has been the sharpest.
From a BE of Rs 610 crore in FY24 to an RE of
Rs 555 crore.
For the Umbrella Program for Development of
Other Vulnerable Groups, the RE is Rs 1,918
crore, down from a BE of Rs 2,194 crore.
6. Income tax is now the biggest income

generator for the government: Most
government financial resources come from
borrowings. But the second biggest
contributor — or the top income generator —
is the revenues from income tax. The Budget
documents suggest that income tax revenues
will account for 19% of all government
resources in FY25. Corporate tax will account
for 17%, GST for 18% and borrowings for 28%.
KEY TAKEAWAYS
KEY TAKEAWAYS
KEY TAKEAWAYS
SOURCES:
1. indiabudget.gov.in
2. indianexpress.com
CREDITS: Mukul, Saristh, Neha
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BUDGET

3. Capital expenditure target not met

4. Cuts in health and education spending

5. Cuts in core schemes for the marginalized

6. Income tax is now the biggest income

CREDITS: Mukul, Saristh, Neha

For queries, suggestions and comments, write to us at:

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