Union Finance Minister Nirmala Sitharaman presented the Interim Budget for 2024 on February 1, laying out the government's fiscal roadmap ahead of the impending general elections. Focused on youth and women empowerment while maintaining fiscal prudence, the budget outlined key initiatives and allocations across various sectors. Here's a comprehensive breakdown of the highlights and implications of the Interim Budget 2024.

  • The fiscal deficit target for FY25 was lowered to 5.1% of GDP, reflecting the government's commitment to fiscal consolidation amidst challenging economic circumstances.
  • No changes were made to direct and indirect tax rates, ensuring stability in the taxation regime.

Key Takeaways from FM's Interim Budget

  • 'Disha Nirdashak' Baatein: FM Sitharaman emphasized five key pillars, including social justice, infrastructure development, and leveraging technology for productivity enhancement.
  • Economic Growth: India's consistent 7% GDP growth over three years reaffirmed its status as the fastest-growing economy in the G20.
  • Capex Continuation: The government reiterated its commitment to sustaining capital expenditure to drive economic growth.
  • IMEC Project: Despite challenges, the India-Middle East-European Corridor project remained on course.
  • Tax Reforms: Notably, outstanding small direct tax demands were withdrawn, providing relief to taxpayers.
  • Disinvestment and Fiscal Targets: The government maintained a flexible approach towards disinvestment and exceeded previous fiscal consolidation targets.

Sectoral Allocations and Initiatives

  • Healthcare: Significant allocations were made for promoting bulk drug parks and enhancing domestic production of pharmaceuticals, bolstering India's health security.
  • Renewable Energy: The launch of solar power schemes aimed at household savings and promoting renewable energy adoption.
  • Housing: PM Awas Yojana Grameen and proposed schemes for middle-class housing signaled positive prospects for the housing sector.
  • Infrastructure and Railways: Increased investments in infrastructure, dedicated freight corridors, and rail expansion projects aimed at bolstering transportation networks.
  • Tourism and Hospitality: Emphasis on developing tourist centers and infrastructure to boost the travel and hospitality sector.

Implications for Key Industries

  • Infrastructure and Construction: Increased capital expenditure presents opportunities for companies like L&T and Ultratech.
  • Banking: Lower fiscal deficit projections could positively impact bond yields and benefit PSU banks.
  • Housing Finance: Proposed housing schemes offer growth potential for companies like LIC Housing Finance.
  • Energy and Power: Initiatives in solar power and energy sectors offer growth opportunities for companies like Tata Power and Suzlon Energy.
  • Agri and Fertilizers: Expansion plans in agriculture benefit companies like Kaveri Seeds and Coromandel International.

MSMEs Welcome Budget 2024: A Roadmap for Growth and Innovation

The Micro, Small, and Medium Enterprises (MSMEs) sector in India has welcomed the Interim Budget 2024 with optimism, hailing it as a catalyst for their growth and development. The budgetary provisions, focusing on adequate financing, technological advancement, and skill enhancement, have garnered positive reactions from stakeholders within the MSME ecosystem.

Key Provisions and Reactions

  1. Credit Guarantee Scheme Revamp: The government's decision to revamp the credit guarantee scheme for MSMEs, enabling collateral-free credit up to Rs 2 crore, has been lauded by industry experts. This move, coupled with faster claim settlements, is expected to encourage banks to extend more loans to MSMEs, thereby facilitating their access to finance.

  2. Policy Priority for MSMEs: With a clear emphasis on timely access to finance, adoption of technology, and skilling of MSMEs, the budget signals the government's commitment to supporting the growth aspirations of small businesses. The increased outlay for infrastructure spending across various sectors like mobility, green energy, and bio-manufacturing is expected to provide a significant boost to MSMEs.

  3. RAMP Scheme Augmentation: The budgetary allocation for the Raising and Accelerating MSME Performance (RAMP) scheme has been augmented to Rs 1,170 crore for FY25, reflecting the government's focus on enhancing the performance of MSMEs. This increase from the previous fiscal year indicates a proactive approach towards strengthening the MSME ecosystem.

  4. Boost for Khadi and Artisanal Sectors: Allocations for schemes like the Khadi Gramodyog Vikas Yojana and PM Vishwakarma have seen substantial increases compared to the previous year. This surge in budget estimates is expected to benefit sectors such as solar energy, construction, food processing, dairy, and fisheries, providing support to skilled micro-entrepreneurs, artisans, and craftsmen.

  5. Emphasis on Innovation and Export: While acknowledging the positive strides, stakeholders have highlighted the need for incentives for innovation, research and development (R&D), and export-oriented measures. Addressing concerns such as import duty adjustments on electronics raw materials and higher dumping duty on imported electronics products is deemed crucial for ensuring the resilience and competitiveness of the domestic market.

Tax Insights from the Interim Budget

The Interim Budget for 2024 unveiled significant tax-related measures aimed at stimulating economic growth and incentivizing investments. From extensions of tax benefits for start-ups to withdrawals of direct tax demands, the budget outlined several key provisions with implications for both corporate and individual taxpayers.

Start-ups and Investment Incentives

  • Extension of Tax Benefits: Tax benefits for start-ups and investments by sovereign wealth funds and pension funds have been extended until March 31, 2025, providing continuity and support for entrepreneurial endeavors.
  • IFSC Unit Tax Exemptions: Tax exemptions for certain units in the International Financial Services Center (IFSC), initially set to expire in March 2024, have been extended to March 31, 2025, fostering a conducive environment for financial activities.

Corporate Tax Rates

  • Continuation of Existing Rates: Domestic companies will continue to benefit from a corporate tax rate of 22 percent, ensuring stability and predictability for businesses.
  • New Manufacturing Companies: New manufacturing companies remain eligible for a reduced tax rate of 15 percent. However, uncertainties arise regarding the extension of Section 115BAB applicability, which offers favorable rates to select entities.

Direct Tax Demand Withdrawals

  • Relief for Taxpayers: The interim budget announced the withdrawal of outstanding direct tax demands, providing relief to taxpayers. Demands up to INR 25,000 for fiscal years up to FY 2009-10 and up to INR 10,000 for FY 2010-11 to FY 2014-15 will be withdrawn, benefiting around 10 million taxpayers.

Personal Income Tax

  • Tax Exemptions: Under the new tax regime, individuals with income up to INR 700,000 are exempt from tax liability, offering relief to low and middle-income earners.

The tax-related outcomes of the Interim Budget 2024 reflect a balanced approach towards fostering economic growth, incentivizing investments, and providing relief to taxpayers. While extensions of tax benefits encourage entrepreneurial activities and financial investments, withdrawals of direct tax demands alleviate the burden on individual taxpayers. Additionally, measures to maintain corporate tax rates and offer exemptions for new manufacturing companies aim to bolster industrial growth and competitiveness. Overall, the budget's tax provisions contribute to creating a favorable tax environment conducive to India's economic development.

Electric vehicles (EVs) Sector

Electric vehicles (EVs) have emerged as a key focus area in India's journey towards sustainable and green transportation. In her budget announcement, Finance Minister Nirmala Sitharaman highlighted the government's commitment to expanding the country's EV charging infrastructure and fostering entrepreneurship opportunities within the sector.

  1. Expansion of EV Charging Infrastructure: The government aims to significantly increase the network of vendors authorized for the supply and installation of EV charging points across India.
  2. Spurring EV Adoption: By making charging facilities more accessible, the initiative aims to alleviate range anxiety among EV owners and potential buyers, thereby accelerating the transition towards electric mobility.
  3. Job Creation and Economic Growth: The expansion of EV charging infrastructure presents opportunities for entrepreneurship and job creation, particularly for skilled and semi-skilled labor in areas such as manufacturing, deployment, and maintenance of charging infrastructure.

The government's vision for FY 2024-25 includes a significant expansion of the network of vendors authorized for the supply and installation of EV charging points across the nation. This initiative marks a crucial step towards addressing the infrastructure gap hindering the widespread adoption of EVs in India. By increasing the accessibility of charging stations, the government aims to alleviate range anxiety among EV owners and potential buyers, thereby accelerating the transition towards electric mobility.

The expansion of EV charging infrastructure holds multifaceted benefits for various stakeholders and the economy as a whole. Firstly, it is expected to spur the adoption of EVs by making charging facilities more readily available, convenient, and accessible. As prospective buyers gain assurance regarding the availability of charging points, they are likely to be more inclined towards investing in EVs, contributing to the reduction of carbon emissions and environmental conservation efforts.

Moreover, the proliferation of EV charging infrastructure presents a significant opportunity for entrepreneurship and job creation. The establishment of a robust network of vendors specializing in the supply and installation of charging points will not only generate employment but also stimulate economic growth. Particularly, this initiative is poised to create employment opportunities for youth with technical skills in the manufacturing and deployment of EV charging infrastructure. The demand for skilled labor in the EV sector is expected to surge, providing avenues for young individuals to leverage their expertise in areas such as electrical engineering, renewable energy, and technology.

Furthermore, the maintenance and upkeep of EV charging infrastructure will require a workforce comprising semi-skilled labor. Tasks such as routine maintenance, troubleshooting, and repairs will contribute to job creation for individuals with varying skill levels, thereby promoting inclusive growth and socio-economic development.

The expansion of EV charging infrastructure aligns with the government's broader agenda of promoting clean energy and sustainable development. By investing in the electrification of transportation, India aims to reduce its dependence on fossil fuels, mitigate air pollution, and combat climate change. Additionally, the growth of the EV ecosystem is expected to stimulate innovation, attract investments, and enhance India's competitiveness in the global market for electric mobility solutions.

The government's initiative to expand EV charging infrastructure in FY 2024-25 represents a significant milestone in India's transition towards sustainable transportation. Beyond facilitating the adoption of EVs, this endeavor holds immense potential for job creation, entrepreneurship, and economic growth. As India embarks on this transformative journey, the development of EV charging infrastructure emerges as a cornerstone of its sustainable development agenda, promising a cleaner, greener, and more prosperous future.

Healthcare Sector

The healthcare sector in India has received significant attention and allocation in the Interim Budget, reflecting the government's commitment to ensuring accessible and quality healthcare services for all citizens. Finance Minister Nirmala Sitharaman outlined several key initiatives aimed at enhancing healthcare infrastructure, promoting preventive healthcare measures, and improving maternal and child health outcomes.

  1. Expansion of Health Insurance Coverage: The government plans to extend the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) to cover all ASHA workers, Anganwadi workers, and helpers. This expansion aims to provide financial protection against healthcare expenses for vulnerable sections of society, ensuring access to essential medical services without financial hardship.
  2. Strengthening Healthcare Infrastructure: The government intends to establish additional medical colleges by leveraging existing hospital infrastructure to address the shortage of healthcare professionals and improve healthcare delivery in underserved areas. A committee will be formed to assess requirements and provide recommendations for the establishment of new medical colleges, thereby strengthening the healthcare workforce and infrastructure.
  3. Focus on Preventive Healthcare: Proactive measures to promote vaccination among girls aged 9 to 14 years to prevent cervical cancer demonstrate the government's commitment to preventive healthcare, particularly for women. Upgrading Anganwadi centers under the "Saksham Anganwadi and Poshan 2.0" initiative aims to enhance nutrition delivery and early childhood care and development, improving maternal and child health outcomes.

Firstly, the government's flagship health insurance scheme, Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), will be extended to cover all ASHA workers, Anganwadi workers, and helpers. This expansion of coverage underscores the government's efforts to provide financial protection against healthcare expenses for vulnerable sections of society, ensuring that they have access to essential medical services without financial hardship.

In addition to expanding health insurance coverage, the government has announced plans to establish additional medical colleges by leveraging existing hospital infrastructure. This initiative aims to address the shortage of healthcare professionals and improve healthcare delivery in underserved areas. A committee will be formed to assess the requirements and provide recommendations for the establishment of new medical colleges, thereby strengthening the healthcare workforce and infrastructure.

Recognizing the importance of preventive healthcare, particularly for women, the government has announced measures to promote vaccination among girls aged 9 to 14 years to prevent cervical cancer. This proactive approach towards preventing diseases through vaccination highlights the government's focus on promoting women's health and well-being.

Furthermore, the government has unveiled plans to upgrade Anganwadi centers under the "Saksham Anganwadi and Poshan 2.0" initiative. These upgrades will focus on enhancing nutrition delivery and early childhood care and development, thereby improving maternal and child health outcomes. By strengthening Anganwadi centers, the government aims to ensure comprehensive healthcare services for women and children, addressing nutritional deficiencies and promoting healthy growth and development.

Additionally, the government has introduced the U-WIN platform for immunization management and intensified efforts under the 'Mission Indradhanush' campaign. These initiatives aim to improve immunization coverage and ensure that all children and vulnerable populations receive essential vaccines to protect against vaccine-preventable diseases. By leveraging technology and implementing targeted vaccination campaigns, the government seeks to strengthen the country's immunization program and safeguard public health.

The healthcare initiatives announced in the Interim Budget underscore the government's commitment to promoting inclusive and equitable healthcare access for all citizens. Through expanded health insurance coverage, infrastructure development, preventive healthcare measures, and immunization campaigns, the government aims to improve health outcomes and enhance the overall well-being of the population. These initiatives represent significant steps towards achieving the goal of universal healthcare coverage and fostering a healthier and more resilient society.

Fisheries Industry

The fisheries industry in India is set to undergo significant transformation with the central government's announcement of key initiatives in the Interim Budget. These initiatives are aimed at modernizing the sector, enhancing productivity, boosting exports, and creating employment opportunities.

  1. Establishment of Integrated Aqua Parks: The government plans to establish five integrated aqua parks across the country, serving as centralized hubs for aquaculture activities. These parks will provide modern infrastructure and facilities to support the growth of the fisheries industry, streamlining operations and improving efficiency.
  2. Amendments to PMMSY Scheme: The existing Pradhan Mantri Matsya Sampada Yojana (PMMSY) scheme will undergo amendments to accelerate aquaculture productivity, aiming to increase productivity from three tons per hectare to five tons per hectare. This initiative is crucial for meeting growing domestic and global demand for fish and seafood products.
  3. Doubling Export Volume: The overarching goal of these initiatives is to double the export volume of fish and seafood products to INR 1 trillion. By boosting exports, the government aims to capitalize on the growing demand for Indian fish and seafood products in international markets, contributing to foreign exchange earnings and economic growth.

Firstly, the government plans to establish five integrated aqua parks across the country. These aqua parks will serve as hubs for aquaculture activities, providing modern infrastructure and facilities to support the growth of the fisheries industry. By setting up these parks, the government aims to create centralized hubs for aquaculture production, processing, and marketing, thereby streamlining operations and improving efficiency in the sector.

Furthermore, the existing Pradhan Mantri Matsya Sampada Yojana (PMMSY) scheme will undergo amendments to accelerate aquaculture productivity. The scheme aims to increase aquaculture productivity from the current three tons per hectare to five tons per hectare, thereby enhancing the yield and efficiency of fish farming operations. This initiative is crucial for meeting the growing demand for fish and seafood products domestically and globally.

The overarching goal of these initiatives is to double the export volume of fish and seafood products to INR 1 trillion. By boosting exports, the government aims to capitalize on the growing demand for Indian fish and seafood products in international markets, thereby contributing to the country's foreign exchange earnings and economic growth.

Additionally, these initiatives are expected to create employment opportunities for 5.5 million individuals in the near term. The expansion of the fisheries industry, coupled with increased productivity and exports, will generate employment across the entire value chain, including fish farming, processing, marketing, and related support services. This will not only create livelihood opportunities for millions of people but also contribute to the socio-economic development of coastal communities and rural areas.

The government's initiatives in the fisheries industry are poised to usher in a new era of growth and development. By investing in infrastructure, enhancing productivity, and promoting exports, the government aims to unlock the full potential of the fisheries sector, thereby creating economic opportunities, ensuring food security, and promoting sustainable development. These initiatives underscore the government's commitment to transforming the fisheries industry into a vibrant and globally competitive sector that contributes to India's overall economic prosperity.

Sustainable and Green Economy

The concept of a green economy, aimed at fostering sustainable development while minimizing environmental impacts, takes center stage in the Interim Budget with a slew of initiatives targeting renewable energy, carbon emissions reduction, and eco-friendly alternatives.

  1. Rooftop Solarization Initiative: The budget outlines plans to benefit 10 million households through rooftop solar installations, providing up to 300 units of electricity monthly. This initiative aims to promote clean energy adoption on a mass scale, while promising substantial annual savings ranging from INR 15,000 to INR 18,000 per household.
  2. Accelerating Renewable Energy Transition: In line with India's commitment to achieving net-zero carbon emissions by 2070, the budget introduces measures such as viability gap funding for offshore wind energy projects and the establishment of coal gasification and liquefaction capacity by 2030. These initiatives aim to diversify the energy mix, reduce reliance on fossil fuels, and promote sustainable energy sources.
  3. Promotion of Alternative Fuels and Bio-based Industries: The budget mandates the phased blending of compressed biogas (CBG) in compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic use. Financial assistance will also be provided for biomass aggregation machinery procurement, facilitating biomass collection for energy production. Additionally, the budget emphasizes the importance of bio-manufacturing and bio-foundry schemes to develop eco-friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals, and bio-agri-inputs, promoting sustainable practices across sectors.

One of the prominent initiatives in promoting renewable energy is rooftop solarization, wherein 10 million households are slated to benefit from solar power installations. This ambitious endeavor not only aims to provide households with up to 300 units of electricity monthly but also promises substantial annual savings, ranging from INR 15,000 to INR 18,000. By leveraging rooftop solar systems, households can not only meet their energy needs but also contribute surplus energy to distribution companies, thus promoting clean energy adoption on a mass scale.

In alignment with India's commitment to achieving net-zero carbon emissions by 2070, the budget outlines several measures to accelerate the transition towards renewable energy sources. Viability gap funding will be provided to harness offshore wind energy potential, marking a significant step towards diversifying the energy mix and reducing reliance on fossil fuels. Additionally, plans are underway to establish coal gasification and liquefaction capacity by 2030, thereby reducing imports of natural gas, methanol, and ammonia.

Furthermore, the budget emphasizes the importance of promoting alternative fuels by mandating the phased blending of compressed biogas (CBG) in compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic use. Financial assistance will also be extended for the procurement of biomass aggregation machinery, facilitating the collection of biomass for energy production.

In addition to renewable energy initiatives, the budget underscores the importance of promoting green growth through bio-manufacturing and bio-foundry schemes. These initiatives aim to develop environment-friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals, and bio-agri-inputs. By fostering innovation in bio-based industries, the government aims to reduce reliance on conventional materials and promote sustainable practices across various sectors.

The Interim Budget's focus on the green economy reflects the government's commitment to sustainable development and environmental conservation. By promoting renewable energy adoption, reducing carbon emissions, and incentivizing eco-friendly alternatives, India aims to pave the way for a greener and more sustainable future. These initiatives not only address environmental challenges but also present opportunities for economic growth, job creation, and technological innovation in the burgeoning green sector.

Railway Corridors

The Economic Railway Corridor Program, unveiled in the Interim Budget announcement by Finance Minister Nirmala Sitharaman, marks a significant step towards enhancing transportation infrastructure and fostering economic growth in India. This ambitious initiative comprises three key corridor programs designed to facilitate the movement of goods and passengers across strategic routes, thereby bolstering connectivity and efficiency in the transportation sector.

The first corridor program focuses on the Energy, Minerals, and Cement sector, recognizing the critical role of these industries in India's economic landscape. By establishing dedicated railway corridors for the transportation of energy resources, minerals, and cement, the government aims to streamline logistics operations, reduce transit times, and minimize transportation costs. This initiative is expected to enhance the competitiveness of these industries, boost production capacities, and facilitate smoother supply chain management.

The second corridor program revolves around Port Connectivity, acknowledging the importance of seamless connectivity between ports and hinterland areas for facilitating trade and commerce. Ports serve as crucial gateways for international trade, and efficient connectivity to these ports is essential for ensuring the smooth flow of goods and commodities. By developing dedicated railway corridors linking major ports with industrial and consumption centers, the government seeks to enhance port efficiency, reduce congestion, and optimize cargo movement. This initiative is poised to unlock the potential of India's maritime trade and promote economic development in coastal regions.

The third corridor program targets High Traffic Density routes, addressing the need for efficient transportation infrastructure along densely populated and economically significant routes. These corridors are characterized by high volumes of passenger and freight traffic, necessitating specialized infrastructure and operational strategies to ensure smooth and safe movement. By focusing on upgrading existing railway lines and developing new dedicated corridors for high-density routes, the government aims to enhance capacity, reliability, and speed of transportation, thereby catering to the growing demand for efficient mobility solutions.

Importantly, these corridor programs are aligned with the broader PM Gati Shakti initiative, which seeks to foster multi-modal connectivity and integrated infrastructure development across the country. By leveraging synergies between railways, roads, ports, and other modes of transportation, the government aims to create a seamless and efficient transportation network that supports economic growth and development.

Overall, the Economic Railway Corridor Program holds immense potential for transforming India's transportation landscape and unlocking new avenues for economic prosperity. Through strategic investments in dedicated corridor projects, the government aims to enhance logistics efficiency, reduce transportation costs, and promote inclusive growth across various sectors of the economy. As these corridor programs take shape, they are expected to play a pivotal role in driving India's journey towards becoming a global economic powerhouse.

Other Sectors

Housing

The government's commitment to addressing the housing needs of India's citizens is underscored by the expansion of the PM Awas Yojana (Grameen). With plans to undertake 20 million more houses under this rural housing scheme, the government aims to provide affordable housing solutions to the marginalized sections of society. Furthermore, a new scheme targeted at individuals living in rented houses, slums, chawls, and unauthorized colonies demonstrates a holistic approach towards addressing housing challenges across various segments of the population. By facilitating access to homeownership for those residing in informal settlements, the government aims to promote social inclusion, improve living standards, and foster community development.

Projects for Developing Eastern India

The government's focus on accelerating the development of eastern India reflects its commitment to fostering balanced regional growth and harnessing the untapped potential of this region. By prioritizing the development of aspirational districts and blocks, the government seeks to create abundant economic opportunities and uplift communities. This concerted effort to make the eastern region a significant driver of India's growth aligns with the government's broader agenda of promoting inclusive and sustainable development across all states and regions.

Tourism

In a bid to harness India's rich cultural and natural heritage, the government is urging states to undertake comprehensive development initiatives for iconic tourist destinations. By promoting these destinations on a global scale and establishing a rating framework based on quality standards, the government aims to enhance the tourism experience and attract more visitors. Moreover, the provision of long-term interest-free loans to states for tourism development projects underscores the government's commitment to supporting infrastructure development and job creation in the tourism sector. Additionally, initiatives aimed at enhancing tourism infrastructure and amenities on Indian islands like Lakshadweep are expected to boost domestic tourism and create significant employment opportunities, particularly in remote areas.

Aviation

The finance minister's acknowledgment of the advancements in the aviation sector highlights the government's efforts to enhance air connectivity and infrastructure across the country. The significant expansion of airports and the roll-out of new air routes under the UDAN scheme signify the government's commitment to promoting regional connectivity and facilitating air travel to tier-two and tier-three cities. Furthermore, the substantial orders for new aircraft by Indian carriers signal confidence in the growth potential of the aviation sector and underscore the government's vision for a robust and dynamic aviation industry.

Overall, these initiatives in housing, regional development, tourism, and aviation underscore the government's commitment to fostering inclusive growth, promoting infrastructure development, and unlocking the economic potential of various sectors across India. By addressing critical challenges and leveraging opportunities for growth and development, the government aims to create a more prosperous and resilient nation for all its citizens.

The Interim Budget for 2024-25 underscores the government's commitment to fiscal discipline and economic growth. With a prudent fiscal deficit target, continued infrastructure investments, and sector-specific initiatives, the budget sets a positive tone for economic recovery and long-term sustainability. The emphasis on quality expenditures and strategic investments bodes well for investor confidence and overall economic stability, signaling promising prospects for various industries and the economy at large.