Budget 2024: CII welcomes Indian government's push for infrastructure, Capex-led growth

The Confederation of Indian Industry (CII) welcomed the Budget 2024 and the step by the Indian government step towards increasing capital expenditure by almost 11 per cent. In the Interim Budget 2024, the government proposed to increase capital expenditure outlay by 11.1 per cent to Rs 11.11 lakh crore for financial year 2024-25. A capital expenditure, or capex, is used to set up long-term physical or fixed assets. In the Union Budget last year, the government proposed to increase capital expenditure outlay by 33 per cent to Rs 10 lakh crore in 2023-24, which was estimated to be 3.3 per cent of the GDP. ‘Very positive step forward’ “The immediate reaction would be the consolidation of the fiscal deficit. Our recommendation initially was a 5.4 per cent fiscal deficit, but it’s now 5.1 per cent, which is a very significant step forward, but at the same time, does not sacrifice the focus on growth. So the capex spend has increased by almost 11.1 per cent, which is also very good. So a continued focus on infrastructure growth takes place. The third very important aspect is the focus on the rural sector and also the four aspects of women, the farmer and the poor being taken care of,” R Dinesh, CII President, was quoted as saying by ANI. “The continuation of the housing, both for women as well as for the rural sectors, are all very welcome,” he said. “This takes care of the equitable growth approach of the government and we have to wait and see regarding the direct tax and indirect tax proposals. As the finance minister has said, that will be taken up only in the final budget. So, therefore, this budget does not cover that. So as far as we are concerned, it’s a very positive step forward concerning having the headroom available for growth, Considering the fiscal deficit and also the focus on equitable growth from an industry perspective, obviously we will wait for the main budget to come to look at that details.” R Dinesh added. Sitharaman pegged the fiscal deficit target for 2024-25 at 5.1 per cent of gross domestic product (GDP). In 2023-24, the government pegged the fiscal deficit target for 2023-24 at 5.9 per cent of GDP. On Thursday (1 February), the Finance Minister said the fiscal deficit of 2023-24 was downwardly revised to 5.8 per cent. The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings that may be needed by the government. The government intends to bring the fiscal deficit below 4.5 per cent of GDP by the financial year 2025-26. No change in tax slab Providing a major relief to the citizens, the central government has neither tweaked nor raised tax burden on citizens. “As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” Sitharaman said. “However, certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC units are expiring on 31.03.2024. To provide continuity in taxation, I propose to extend the date to 31.03.2025,” she said. The Interim Budget 2024, tabled on Thursday, will take care of the financial needs of the intervening period until a new government is formed after the Lok Sabha 2024 elections after which a full budget will be presented in July. With presentation of Budget today, Sitharaman equaled the record set by former Prime Minister Morarji Desai, who as finance minister, presented five annual budgets and one interim budget between 1959 and 1964. The Indian economy is projected to grow close to 7 per cent in the financial year 2024-25 which starts this April, said the Ministry of Finance in a review report. India’s economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22. The Indian economy is expected to grow 7.3 per cent in the current financial year 2023-24, remaining the fastest-growing major economy. With inputs from ANI