Projecting Narendra Modi’s return, Indian FM presents poll-bound ‘no disruption’ unchanged tax rate Interim Budget, estimates fiscal deficit at  5.1% of GDP

Exuding confidence that the Modi government will return to power for the third consecutive term, India’s Finance Minister Nirmala Sitharaman presented an interim “national election year” budget of “no disruption” keeping tax slabs unchanged, focusing on inclusivity, continued economic reforms and listing the achievements of the NDA in the past ten years while refraining from any new populist announcement.

Indian's Finance Minister Nirmala Sithraman (centre) with other ministers before presenting the Interim Budget on February 1, 2024. Photo credit: PIB
The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Ministers of State for Finance, Pankaj Chaudhary, the Union Minister of State for Finance, Dr Bhagwat Kishanrao Karad and the senior officials of the Ministry of Finance to present the Union Budget 2024, in New Delhi on February 01, 2024. Photo credit: PIB

While an interim budget is about allocating funds to keep the government functions going before a new government is installed and present a full budget (national polls are due by May in India), the FM focused on the achievements of the Modi government in the past ten years.

Emphasising that the government is focusing on Garib, Mahila, Yuva, Annadata (poor, women, youth and farmers), Sitharaman said the government has brought 25 crore (250 million) people out of multidimensional poverty.

“The Indian economy has witnessed positive transformation in the last 10 years. People are looking towards the future with hope. In 2014, the country was facing enormous challenges. With Sabka Saath, Sabka Vikaas, the Narendra Modi-led government overcame those challenges,” she said.

Sitharaman said the government will target a fiscal deficit of 5.1% for the financial year 2024-25, with gross borrowings at Rs 14.13 lakh crore. “The fiscal deficit in 2024-25 is estimated to be 5.1% of GDP. The revised estimate of the fiscal deficit is 5.8% of GDP,” she said.

Announcing no change in the tax slabs, Sitharaman said, “I do not propose any changes in tax rates in direct and indirect taxes including import duties.”

She also mentioned the Modi government’s efforts to ensure homes for the middle-class and poor instead of living in rented accommodation or slums.

Pointing out some of the bright spots of the economy, the Finance Minister informed that the Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh crore, of which the tax receipts are Rs 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, reflecting strong growth momentum and formalization in the economy. Sitharaman also stated that the gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.13 and 11.75 lakh crore respectively and both will be less than that in 2023-24.She announced that the FDI inflow during 2014-23 was USD 596 billion marking a golden era and this is twice the inflow during 2005-14.

“For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of ‘first develop India’,” the Finance Minister added.

The FM said through rooftop solarization, one crore households will be enabled to obtain up to 300 units free electricity every month.

Financial Highlights:

  • India’s Real GDP projected to grow at 7.3 percent in FY 2023-24.
  • Capital expenditure outlay for the next year is being increased by 11.1 percent to Rs 11,11,111 crore, which would be 3.4 percent of the GDP.
  • Fiscal deficit in 2024-25 is estimated to be 5.1 percent of GDP.
  • FDI Inflow during 2014-23 was USD 596 billion, which is twice the inflow during 2005-14.
  • Scheme of 50 year interest free loan for CAPEX to states will be continued this year with total outlay of Rs 1.3 lakh crore.
  • No Change proposed in tax rates in the Interim Budget.
  • About one crore tax payers expected to benefit from withdrawal of certain petty and disrupted direct tax demands.

Highlights of Sitharaman’s Budget presentation

  • Governance Development and Performance is our GDP. We focus on minimum government and maximum governance. Investments are robust, the economy is doing well. People are living and earning better. Average income increased by 50 percent.
  • GST enabled one nation, one market, one tax and widened the tax base.
  • Direct Benefit Transfer of Rs. 34 lakh crore using PM Jan Dhan accounts has led to huge savings for the government. This has been realized through avoidance of leakages, savings have helped in providing more funds for welfare of the poor
  • Global situation is one of disruption and war. The new world order is emerging after Covid pandemic. India assumed the G20 presidency in difficult times. But India successfully navigated its way.
  • The govt will facilitate energy security in terms of accessibility and affordability. 1.4 crore youth trained under Skill India programme. Rs 43 crore loan given for startups.
  • Making Triple Talaq illegal, one third women’s reservation in Lok Sabha and state assemblies, giving over 70 percent houses under PM Awas Yojana in rural areas to women as sole or joint owners have enhanced their dignity.
  • Empowerment of Women through entrepreneurship, ease of living and dignity has gained momentum in the last 10 years. 30 crore MUDRA Yojana loans have been given to women entrepreneurs.
  • Lakhpati Didi Scheme which offers loans to women is extended from 2 crores to 3 crores women.
  • We aim for Atmanirbharta in oilseeds like sesame, sunflower, mustard, and others along with a comprehensive programme to support dairy farmers.
  • Vision for Viksit Bharat is that of prosperous Bharat, in harmony with nature, with modern infrastructure and providing opportunities for all to reach their potential. Next five years will be years of unprecedented development and golden moments to realize the goal of developing India by 2047. The Trinity of democracy, demography and diversity backed up by Sabka Prayaas has the potential to fulfill the aspirations of every Indian.
  • 517 new udan routes from air travel.
  • Electric Vehicle ecosystem will be improved.
  • Vande Bharat and Namo Bharat trains to be extended.
  • FM mentions island tourism promotion like in Lakshadweep
  • Direct tax collection more than trebled