Union Budget 2024: A Landmark Presentation
Finance Minister Nirmala Sitharaman is set to present her seventh consecutive Union Budget on July 23, 2024, making history as the first to achieve this milestone, surpassing former Prime Minister Morarji Desai. This Budget marks the first of the BJP-led NDA government since its re-election in June, a period characterized by balancing taxpayer relief with measures to maintain fiscal discipline.
In contrast to 2019, where the BJP held 303 seats in the Lok Sabha, the party now controls 240 seats. This reduction signals some resentment and dissent against the economic policies from their previous term (2019-24). The electorate’s message reflects disappointment with the government’s handling of economic issues, placing even greater scrutiny on this Budget.
The fiscal deficit for FY 2023-24 stood at 5.63% of GDP, with a target of 5.1% for FY 2024-25. Given the significant contribution of personal tax to overall direct-tax collections, the government is unlikely to introduce measures that would significantly reduce tax revenue.
Ahead of the Union Budget, the Economic Survey for FY 2024 was tabled in the Lok Sabha on July 22, projecting GDP growth for FY 2025 between 6.5% and 7%. This is lower than the estimated 8.2% growth for the previous fiscal year, reflecting global challenges that may impact exports.
Minister of State for Finance Pankaj Chaudhary emphasized that this Budget follows PM Modi’s mantra of “Sabka Saath Sabka Vikas” (Collective Efforts, Inclusive Growth). Chaudhary, along with Vivek Joshi, Secretary of the Department of Financial Services, and Chief Economic Advisor V. Anantha Nageswaran, was among the first to arrive at the Finance Ministry ahead of the Budget presentation.
Extreme weather, lower reservoir levels, and crop damage over the past two years have impacted farm output, leading to higher food prices, according to the Economic Survey. Food inflation, based on the Consumer Food Price Index, increased from 3.8% in FY22 to 7.5% in FY24, highlighting the agriculture sector’s vulnerability to adverse weather conditions.
Anticipated changes around personal taxation in the upcoming Budget aim to balance fiscal discipline with taxpayer relief. Potential measures include modifications to the simplified tax regime, standard deduction, NPS employee contribution deduction, and reintroduction of deductions for infrastructure bond investments. Additionally, there may be adjustments to deductions for interest paid on loans for affordable housing and housing rent allowance in metro cities.
Key highlights from the Economic Survey 2023-24 include a positive outlook for India’s financial sector, despite potential vulnerabilities. The dominance of banking support for credit is reducing, while the role of capital markets is rising. India’s GDP is expected to grow at 6.5% to 7% in the current fiscal year, amid global challenges.
The survey also reported a significant revival in India’s tourism industry, with 92 lakh foreign tourist arrivals in 2023, a 43.5% year-on-year increase. The hospitality industry added 14,000 new rooms, bringing the total inventory to 183,000, indicating strong post-pandemic recovery.
Finance Minister Nirmala Sitharaman’s Budget presentation will be streamed live on various platforms, including The Hindu and Sansad TV. This record seventh consecutive Budget presentation positions her alongside notable predecessors like Morarji Desai and P. Chidambaram in terms of consecutive and total Budget presentations.
As India braces for the Budget, the focus remains on balancing economic growth with fiscal prudence, addressing the electorate’s concerns, and navigating global economic challenges. The Budget aims to reflect the aspirations of a diverse coalition government while striving to maintain India’s economic momentum.