Big takeaways from Budget: What Nirmala Sitharaman said on taxes, economy, fiscal deficit

It’s Budget Day in India. Finance Minister Nirmala Sitharaman presented the interim budget on 1 February for the forthcoming financial year (2024-25), the last in Prime Minister Narendra Modi’s second term ahead of the general election. With her sixth straight speech, Sitharaman equalled the record of former Prime Minister Moraji Desai. As the next “full budget” will be presented in July only once the new government the sworn in following the Lok Sabha polls, in the speech the finance minister underscored the achievements of the incumbent government over the past decade. And she set the roadmap for the next five years. We take a look at Sitharaman’s speech and the key takeaways from it. Also read: Budget 2024 LIVE: Govt aims aggressive fiscal consolidation, no changes in tax slabs in interim budget Taxes What concerns most Indians when it comes to budget are taxes. There are no changes in direct or indirect taxes unlike the interim Budget for 2019-20, including import duties. However, some exceptions have been made for start-ups. In the interim Budget, the government has proposed withdrawing tax demand up to Rs 25,000 up to 2009-10, a move that Union Finance Minister Nirmala Sitharaman said could benefit 1 crore taxpayers. She further said that a big focus of the budget was improving services for taxpayers. The number of tax filers increased by 2.4 times, Sitharaman said. The direct tax collection has trebled since 2014. In 2024-25, the tax receipts are projected at Rs 26.02 lakh crore. [caption id=“attachment_13677222” align=“alignnone” width=“640”] Sitharaman presents Budget 2024 in Lok Sabha. Source: Screengrab/Sansad TV[/caption] Economy Sitharaman said that the next five years will see unprecedented economic growth in India. India’s economy, the fastest growing among major nations, is going through profound change, she said as desks thumped in Parliament. She said that the government aims to make the country “Viksit” (developed) by 2047. “The next five years will be years of unprecedented development and golden moments to realise the dream of developed India by 2047, she claimed. Fiscal defecit target The revised fiscal deficit — the gap between the government’s revenue and expenses — is at 5.8 per cent of the GDP for 2023-24. The fiscal deficit in FY25 is expected to be 5.1 per cent of GDP. The target is to reduce the fiscal deficit to below 4.5 per cent of the GDP in 2025-26 (FY26). FDI Sitharaman said India has received a Foreign Direct Investment (FDI) inflow of $596 billion since 2014, which is double the inflow between 2004 and 2014. She added that the government has launched Blue Economy 2.0 to promote aquaculture in the country. [caption id=“attachment_13677812” align=“alignnone” width=“640”] The most-used words in the finance minister’s speech[/caption] Global challenges amid wars The finance minister said the global situation is becoming more complex and challenging due to wars and conflicts in different parts of the world. The Russia-Ukraine conflict and the Israel-Hamas war have disrupted the global supply chains, impacting trade. She said that the new world order is emerging and India has successfully navigated the global challenges in fuel and fertiliser price spikes. Defence The government will launch a new scheme to strengthen deep tech for defence purposes. As per the interim Budget documents, the defence ministry has been given the highest allocation with Rs 6.1 lakh crore Farmers As many as 11.8 crore farmers were provided financial assistance under the PM KISAN Yojana, Sitharaman said. Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is one of the world’s largest Direct Benefit Transfer (DBT) schemes. Under the PM-KISAN scheme, the government provides a financial benefit of Rs 6,000 per year in three equal four-monthly instalments. The money is transferred into the bank accounts of farmers’ families across the country through DBT mode. [caption id=“attachment_13677822” align=“alignnone” width=“640”] A word cloud of FM’s speech[/caption] Houses Sitharaman said that the government will help deserving sections of the middle class to build their own houses. She said the government will build 20 million affordable houses in the next five years, to add to the 30 million houses built already. She also announced two crore more houses under the Pradhan Mantri Awas Yojana – Gramin ( PMAY-G). Technology “For our tech-savvy youth, this will be a golden era. A corpus of Rs 1 lakh crore will be established with a 50-year interest-free loan provided. The corpus will provide long-term financing and re-financing with long tenures at low or nil interest rates. This will encourage the private sector to scale up research and innovation significantly in sunrise domains.” “We need to have programmes that combine the powers of our youth and technology. A new scheme will be launched for strengthening deep tech technology for defence purposes and expediting atma nirbharta,” she said. Inflation Proactive inflation management has helped keep the country’s inflation within the manageable range, the finance minister said, adding that inflation has moderated. Women and social justice The success of self-help groups empowered 1 crore women to become “Lakhpati didis”, Sitharaman said while presenting Budget 2024. The government, under the leadership of Prime Minister Narendra Modi, is addressing systematic inequalities, which have plagued society, Sitharaman said. She said economic management over the past decade has complemented people-centric inclusive development. STEM (Science, Technology, Engineering, and Mathematics) courses have seen enrolment of 43 per cent women, the highest in the world, she added. Electric Vehicles The government will expand the electric vehicle ecosystem to support charging infra, and e-buses for public transport networks will be encouraged, the finance minister said on Thursday. Sitharaman, in her pre-election Budget, also said the blending of compressed biogas into compressed natural gas for transport and piped natural gas will be mandatory. More medical colleges The finance minister also announced plans to set up more medical colleges through the utilisation of the “existing hospital infrastructure under various departments”. “A committee for this purpose will be set up to examine the issues and make relevant recommendations,” she said. Tourism For a boost to tourism, “long-term interest-free loans to be provided to States to encourage development.” Lakshadweep found a special mention in the speech. Sitharaman said the island Union Territory of Lakshadweep will get undivided attention from the government to improve its tourist infrastructure. After a diplomatic row with the Maldives, Indian tourists are looking to  Lakshadweep as an alternative destination. GDP – Governance, Development and Performance Sitharaman redefined GDP in her speech. “The government is equally focused on GDP – Governance, Development and Performance.” With inputs from agencies