As 2024 is an election year, an interim budget was presented on February 1, 2024 by the finance minister, Nirmala Sitharaman, instead of a normal budget. The finance minister started her speech emphasising Indian economy’s significant transformation in the last decade. Through transforming narrative from ‘Sabka Saath, Sabka Vikas’ to ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas’, the development philosophy includes social inclusivity across all the strata of society and geographical inclusivity through the development of all the regions of the country. The ‘Sabka Prayas’ approach helped the country overcome the COVID-19 pandemic, advance towards Aatmanirbhar Bharat, and commit to achieving ‘Panch Pran’, of the Amrit Kaal.
The Panch Pran of the Amrit Kaal are:
- Goal of Developed India;
- Removing any traces of the colonial mindset;
- Pride in our roots;
- Unity; and
- Sense of duty among citizens.
Finance Minister stated that this budget is more of a vote-on-account rather than an Interim Budget.
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Interim Budget (Article 112) |
Vote-on-Account (Article 116) |
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Content |
Contains details of both revenue and expenditure for the period until the new government takes over and presents a full budget. It includes the current state of the economy, plan and non-plan expenditures, receipts, changes in tax rates, revised estimates of the current financial year, and estimates for the next financial year. |
Includes only the government’s expenditures, focusing on essential expenses such as salaries of central government employees, funding of ongoing projects, and other government expenditures. |
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Scope |
Provides a comprehensive overview of the government’s financial situation and plans for the upcoming fiscal year. |
Serves as a temporary measure to meet essential expenses until a full-fledged budget can be presented, typically during a transitional period such as an election year. |
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Announcements |
May include major announcements and policy changes. |
Typically, does not involve major announcements but focuses on maintaining essential government functions and expenditures. |
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Period covered |
Covers the entire fiscal year or a significant portion of it. |
Covers a shorter period, usually two to four months, until a full budget can be passed. |
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Purpose |
Provides continuity in government spending and financial planning during a transition period, such as the period between governments. |
Ensures that essential government functions can continue without disruption until a full budget can be passed, particularly in cases like election years when a new government is expected to take over. |
The term ‘Budget’ is not mentioned in the Constitution. Article 112 of the Constitution mentions Annual Financial Statement, i.e., a statement of the estimated receipts and expenditure of the Government of India for a particular financial year.
The budget is prepared by the Budget Division of the Department of Economic Affairs under the Ministry of Finance.
On April 7, 1860, Scottish economist and politician, James Wilson of the East India Company, presented the Budget for the first time in India to the British Crown.
The first budget of independent India was presented on November 26, 1947, by the then Finance Minister R.K. Shanmukham Chetty.
An Interim Budget intends to continue government’s spending, income and services for a short time in an election year until a new government is formed and presents a full-fledged union budget that covers the government’s expected expenditures and revenues for a fiscal year.
This interim budget can be divided into two parts—A and B.
Part A: Achievements and Strategy for Amrit Kaal
The vision of the budget is a prosperous Bharat, a society that balances nature, modern infrastructure, and provides opportunities for all. India aims to become a ‘Viksit Bharat’ by 2047 by enhancing people’s capabilities and empowering them across all castes and levels. The government’s four major focus areas are: Garib (poor), Mahilayen (women), Yuva (youth), and Annadata (farmer). Besides these four focus areas, the budget also highlights strategy for the Amrit Kaal with special focus on Sustainable Development, Infrastructure and Investment, Inclusive Development including Health, Housing, and Tourism, and Agriculture and Food Processing.
1. Garib (Poor)
The government has been focusing on empowering the poor (garib kalyan, desh ka kalyan) to help them escape poverty. Over the past decade, the government has assisted 25 crore people in overcoming multi-dimensional poverty through the ‘Sabka ka Saath’ initiative. The Direct Benefit Transfer (DBT) of 34 lakh crore using PM-Jan Dhan accounts, has resulted in significant savings of 2.7 lakh crore for the government in terms of leakage of funds, which allowed for more funds for Garib Kalyan. The Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM-SVANidhi) scheme provided credit assistance to 78 lakh street vendors, with 2.3 lakh receiving credit for the third time. Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM-JANMAN) Yojana focuses on vulnerable tribal groups and PM-Vishwakarma Yojana offers end-to-end support to artisans and craftspeople in 18 trades. The government’s commitment to empowering Divyangs (disabled persons) and transgender persons reflects its commitment to ensuring that no one is left behind.
2. Yuva (Youth or Amrit Peedhi)
The National Education Policy (NEP) 2020 is implementing transformational reforms to empower the youth, with Pradhan Mantri Schools for Rising India (PM SHRI) providing quality teaching and nurturing holistic individuals. The Skill India Mission has trained 1.4 crore youths, upskilled 54 lakhs, and established 3000 new ITIs. India has also established 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS, and 390 universities. PM Mudra Yojana has sanctioned 43 crore loans for entrepreneurial aspirations, and various schemes such as Fund of Funds, Start Up India, and Start Up Credit Guarantee to assist the youth. Indian youths have also shown success in sports, with the highest ever medal tally in Asian Games and Asian Para Games in 2023. Presently, India has over 80 chess grandmasters, compared to just over 20 in 2010.
3. Annadata (Farmers)
The PM-Kisan Samman Yojana provides financial assistance to 11.8 crore farmers, including marginal and small farmers, annually, while PM Fasal Bima Yojana provides crop insurance to 4 crore farmers. These programmes help farmers produce food for the country and the world. The Electronic National Agriculture Market integrates 1361 mandis, serving 1.8 crore farmers with a trading volume of Rs 3 lakh crore. The sector is poised for inclusive, balanced growth, and productivity through farmer-centric policies, income support, risk coverage, and technology promotion through start-ups.
4. Mahilayen (Women)
Over the past decade, nari shakti or women’s empowerment through entrepreneurship, ease of living, and dignity has increased. Thirty crore Mudra Yojana loans have been given to women entrepreneurs. Female enrolment in higher education has risen by 28 per cent in ten years. In STEM courses, girls and women make up 43 per cent of enrolment, making them one of the highest in the world. Measures such as making ‘Triple Talaq’ illegal, reserving one-third seats for women in legislative assemblies, and providing over 70 per cent houses under PM Awas Yojana in rural areas to women as sole or joint owner have also enhanced their dignity.
Following areas are the focal points of the Strategy for the Amrit Kaal:
1. Clean Energy (Sustainable Development)
Over 10 crore LPG connections were released under the Pradhan Mantri Ujjwala Yojana (PMUY). Some 36.9 crore LED bulbs, 72.2 lakh LED tube lights, and 23.6 lakh energy-efficient fans were distributed under the UJALA scheme. Besides, 1.3 crore the LED street lights were installed under the Street Light National Programme (SNLP).
To achieve net-zero emissions by 2070, the government plans to provide viable funding for offshore wind energy, establish a 100 MT coal gasification and liquefaction capacity by 2030, and reduce imports of natural gas, methanol, and ammonia.
Mandatory phased blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be implemented.
The government will provide financial assistance for the procurement of biomass aggregation machinery to aid in the collection process.
Rooftop solarisation will enable one crore households to obtain up to 300 units of free electricity per month.
The public transport network is set to adopt, e-buses and strengthen the e-vehicle ecosystem through manufacturing and charging. A new bio-manufacturing and bio-foundry scheme is also expected to be launched.
2. Infrastructure and Investment
The capital expenditure outlay for the next year will be increased by 11.1 per cent, reaching a total of 11,11,111 crore rupees which is 3.4 per cent of the GDP, following a massive tripling in the past four years.
The FDI inflow during 2014–23 reached USD 596 billion, marking a golden era, twice the inflow of 2005–14. To encourage sustained investment, India is negotiating bilateral investment treaties with foreign partners.
A 50-year interest-free loan for states capital expenditure with a total outlay of Rs 1.3 lakh crore will continue this year for development reforms needed by the state governments to achieve the vision of Viksit Bharat.
The PM Gati Shakti initiative aims to implement three major economic railway corridor programmes: (1) Energy, mineral, and cement corridors; (2) Port connectivity corridors; and (3) High traffic density corridors. These projects aim to improve logistics efficiency, reduce costs, and accelerate the GDP growth. Decongestion in high-traffic corridors will improve passenger train operations, resulting in safety and faster travel. Additionally, 40,000 normal rail bogies will be converted to Vande Bharat standards to enhance passenger safety, convenience, and comfort.
The aviation sector has experienced significant growth in the past decade, with the number of airports doubling to 149. The Ude Desh ka Aam Nagarik (UDAN) scheme has expanded air connectivity to tier-two and tier-three cities, with 517 new routes carrying 1.3 crore passengers. Moreover, Indian carriers have ordered over 1000 new aircrafts, ensuring rapid expansion and development of new airports.
Metro Rail and NaMo Bharat drove urban transformation by expanding transit-oriented development in large cities.
3. Inclusive Development
Aspirational District Programme aims to expedite the development of states, fostering employment generation.
Health The government plans to promote cervical cancer vaccination for girls aged 9–14 to prevent the disease.
The Saksham Anganwadi and Poshan 2.0 initiative aims to streamline maternal and child care schemes, expedite the upgrading of anganwadi centres, and improve nutrition delivery, early childhood care, and development.
The U-WIN platform, designed to manage immunisation and intensify Mission Indradhanush efforts, will be promptly implemented across the country.
The Ayushman Bharat scheme will be extended for healthcare coverage to all ASHA workers, anganwadi workers, and helpers.
Housing Despite challenges posed by the COVID-19 pandemic, PM Awas Yojana (Grameen) still continues, nearing the target of three crore houses. Two crore more houses will be built in the next five years to meet the increase in the number of families.
Housing for Middle Class scheme will be launched to promote middle class to buy/built their own houses.
Tourism The G20 meetings in 60 locations showcased India’s diversity to the global audience, making the country an attractive destination for business and conference tourism. The middle class now seeks travel and exploration, creating opportunities for local entrepreneurship in spiritual tourism.
States will be encouraged to develop iconic tourist centre globally, branding and marketing them, and establishing a rating framework based on facility and service quality. Long-term interest-free loans will be provided to finance this development on a matching basis.
The islands, including Lakshadweep, will undertake projects for port connectivity, tourism infrastructure, and amenities to boost domestic tourism and employment.
Agriculture and Food Processing The Pradhan Mantri Kisan Sampada Yojana (PMKSY) has helped 38 lakh farmers and generated 10 lakh jobs. The Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has provided credit linkages to 2.4 lakh SHGs and 60,000 individuals to reduce post-harvest losses and improve productivity and incomes.
The government plans to encourage private and public investment in post-harvest activities like aggregation, modern storage, efficient supply chains, processing, marketing, and branding to accelerate the sector’s growth.
The successful adoption of Nano Urea will lead to the expansion of Nano-DAP’s application on various crops across all agro-climatic zones.
The Aatmanirbhar Oil Seeds Abhiyan strategy is aimed at achieving ‘aatmanirbharta’ for oil seeds like mustard, groundnut, sesame, soybean, and sunflower. It will include research for high-yielding varieties, adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance. In 2022–23, India imported 167.1 lakh tonnes of edible oil (16 per cent more than the 2021–22).
A comprehensive Dairy Farmer Support Programme will be developed, focusing on foot and mouth disease control. India, the world’s largest milk producer, struggles with low milch-animals productivity. The programme will build on existing schemes like the Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry.
The government established the Department of Fisheries to assist fishermen, leading to a doubled production of inland and aquaculture, and a doubled seafood export since 2013–14. The Pradhan Mantri Matsya Sampada Yojana (PMMSY) aims to increase aquaculture productivity from existing 3 to 5 tonnes per hectare, double exports to 1 lakh crore, and generate 55 lakh employment opportunities in near future. Blue Economy 2.0 will launch a multi-sectoral approach to promote climate resilient activities, including restoration and adaptation measures for coastal aquaculture and mariculture. Five integrated aquaparks will also be set up under the programme.
Other Important Measures
Lakhpati Didi Eighty-three lakh self-help groups (SHGs), including nine crore women, are transforming rural socio-economic landscapes through empowerment and self-reliance. Nearly one crore women have become Lakhpati Didi, inspiring others. The target for Lakhpati Didi has been increased from two crore to three crore, recognising their achievements and inspiring others.
Technological changes New age technologies and data are revolutionising lives and businesses, creating new economic opportunities and enabling high-quality services at affordable prices for all, including those at the bottom of the pyramid. India is demonstrating solutions through innovation and entrepreneurship, expanding global opportunities for India.
Research and innovation for catalysing growth, employment, and development The Indian government plans to establish a Rs one lakh crore corpus with a fifty-year interest-free loan to support tech-savvy youth. This will provide long-term financing and refinancing, encouraging the private sector to increase research and innovation in emerging domains. Additionally, a new scheme will be launched to strengthen deep-tech technologies for defence purposes and expedite ‘aatmanirbharta’.
Societal changes The government plans to create a committee to address the challenges arising from rapid population growth and demographic changes. The committee will be mandated to provide comprehensive recommendations in line with the goal of ‘Viksit Bharat’.
The government has estimated a nominal GDP growth rate of 10.5 per cent in 2024–25 (i.e., real growth plus inflation).
Revised estimates for 2023–24 The revised estimate for total receipts other than expenditure is Rs 27.56 lakh crore, with tax receipts of Rs 23.24 lakh crore, and total expenditure of Rs 44.90 lakh crore.
The revenue receipts of Rs 30.03 lakh crore are anticipated to exceed the Budget Estimate due to robust economic growth momentum and formalisation.
The revised fiscal deficit estimate is 5.8 per cent of GDP, which is an improvement on the Budget Estimate, despite moderate nominal growth estimates.
Budget estimates for 2024–25 The total receipts other than borrowings and expenditure for 2024–25 are estimated at Rs 30.80 and Rs 47.66 lakh crore, respectively, with tax receipts at Rs 26.02 lakh crore.
This year, a fifty-year interest-free loan scheme for capital expenditure to states will be continued with a total outlay of Rs 1.3 lakh crore.
The budget for 2021–22 had outlined a fiscal consolidation plan to reduce the fiscal deficit below 4.5 per cent by 2025–26. The projected fiscal deficit in 2024–25 is 5.1 per cent of GDP.
The central government’s estimated gross and net market borrowings through dated securities for 2024–25 are estimated at 14.13 and 11.75 lakh crore, respectively, which will be less than that in 2023–24 due to scaled private investments and larger credit availability for the private sector through lower borrowings.
| Rupee comes from (in per cent) | Rupee goes to (in per cent) | ||
| Borrowing and other liabilities | 28 | Interest Payments | 20 |
| Income tax | 19 | States’ share of taxes and duties | 20 |
| GST and other taxes | 18 | Central sector schemes | 16 |
| Corporation tax | 17 | Defence | 8 |
| Non-tax receipts | 7 | Centrally sponsored scheme | 8 |
| Union excise duties | 5 | Finance commission and other transfers | 8 |
| Customs | 4 | Subsidies | 6 |
| Non-debts capital receipts | 1 | Pensions | 4 |
| Other expenditures | 9 |
The Centre’s highest income source is borrowings and liabilities, accounting for 28 per cent of total income. The highest amount goes towards interest payments and providing funds to states through taxes and duties, accounting for 20 per cent each of the total expenditure.
Part B: Targets and Estimates
Direct Taxes
Over the past decade, direct tax collections have more than trebled, with return filers increasing by 2.4 times.
The government has reduced and rationalised tax rates, reducing tax liability for taxpayers with income up to Rs 7 lakh, from Rs 2.2 lakh in 2013–14.
The threshold for presumptive taxation for retail businesses has been raised from Rs 2 crore to Rs 3 crore, while the threshold for professionals has been raised from Rs 50 lakh to Rs 75 lakh. Additionally, the corporate tax rate has been reduced from 30 per cent to 22 per cent for existing domestic companies and 15 per cent for certain new manufacturing companies.
Over the past five years, the focus has been on improving tax-payer services, introducing Faceless Assessment and Appeal, updated income tax returns, a new Form 26AS, and prefilling of tax returns. This has led to increased efficiency, transparency, and accountability. The average processing time of returns has also been reduced from 93 days in 2013–14 to ten days this year, resulting in faster refunds.
Indirect Taxes
Goods and services tax (GST) has significantly reduced the compliance burden on trade and industry in India by unifying the fragmented indirect tax regime.
Some 94 per cent of industry leaders view the transition to GST as largely positive, according to a recent survey. The elimination of tax arbitrage and octroi has led to supply chain optimisation, with 80 per cent of respondents stating that check posts have been disbanded at state and city boundaries. Additionally, the tax base of GST has doubled, with an average monthly gross GST collection of almost Rs 1.66 lakh crore.
States have benefitted too, they have seen a buoyancy of 1.22 in their State-GST revenue post-GST period of 2017–18 to 2022–23, compared to a mere 0.72 in the pre-GST period of 2012–13 to 2015–16. The biggest beneficiaries are consumers, as reduced logistics costs and taxes have reduced prices of goods and services.
There was a rise in average monthly gross GST collections from 0.9 lakh crore in financial year 2018 to 1.5 lakh crore in 2023 which is expected to increase to 1.7 lakh crore in 2024.
Volume of digital transactions increased from 2,071 crore in 2017–18 to 13,462 crore in 2022–23 at a compound annual growth rate (CAGR) of 45 per cent.
Employment rate declined from 6.1 per cent in 2017–18 to 3.2 per cent in 2022–23.
The customs department has implemented measures to improve international trade, resulting in a 47 per cent decrease in import release time at Inland Container Depots, 28 per cent reduction at air cargo complexes, and 27 per cent reduction at sea ports over the past four years since the start of the National Time Release Studies in 2019.
Tax Proposals
The budget does not propose any changes to taxation, and retains the same rates for direct and indirect taxes, including import duties, in accordance with convention. However, certain tax benefits for start-ups and investments by sovereign wealth or pension funds, as well as tax exemptions on income of some International Financial Services Centre (IFSC) units, are set to expire on March 31, 2024, which will be extended to March 31, 2025.
The budget proposes to improve tax payer services by withdrawing outstanding direct tax demands up to Rs 25,000 for the period up to 2009–10 and 10,000 rupees for 2010–11 to 2014–15. This move is in line with the government’s vision to improve ease of living and business, as many petty, non-verified, non-reconciled or disputed demands date back to 1962. The move is expected to benefit about a crore taxpayer.
Deficits (in per cent) at a Glance
| Deficit | 2022–23 (Actual) |
2023–24 (Budget Estimates) |
2023–24 (Revised Estimates) |
2024–25 (Budget Estimates) |
| Fiscal Deficit | 6.4 | 5.9 | 5.8 | 5.1 |
| Revenue Deficit | 3.9 | 2.9 | 2.8 | 2.0 |
| Effective Revenue Deficit | 2.8 | 1.7 | 1.8 | 0.8 |
| Primary Deficit | 3.0 | 2.3 | 2.3 | 1.5 |
Allocation to Major Schemes (in crores)
| Schemes | 2023–24 (Budget Estimates) |
2024–25 (Budget Estimates) |
| Mahatma Gandhi National Rural Employment Guarantee (MGNREGA) Scheme | 60,000 | 86,000 |
| Ayushmann Bharat- PMJAY | 7,200 | 7,500 |
| National Green Hydrogen Mission | 297 | 600 |
| Solar Power (Grid) | 4,970 | 10,000 |
| PM Schools for Rising India (PM SHRI) | 4,000 | 6,050 |
| Strengthening Teaching-Learning and Results for States (STARS) | 800 | 1,250 |
Allocation to Major Ministries
| Ministry | Allocation 2023–24 (Budget estimates) (in lakh crore) |
Allocation 2024–25 (Budget estimates) (in lakh crore) |
| Ministry of Defence | 5.94 | 6.2 |
| Ministry of Road Transport and Highways | 2.70 | 2.78 |
| Ministry of Railways | 2.41 | 2.55 |
| Ministry of Consumer Affairs, Food, and Public Distribution | 2.06 | 2.13 |
| Ministry of Home Affairs | 1.96 | 2.03 |
| Ministry of Rural Development | 1.60 | 1.77 |
| Ministry of Agriculture and Farmer’s Welfare | 1.25 | 1.27 |
| Ministry of Communications | 1.23 | 1.37 |
Overall Analysis
The government’s emphasis on fiscal consolidation has led to a significant decrease in the Centre’s gross fiscal deficit, which is expected to fall to 5.1 per cent in the coming fiscal year. This is largely due to a cut in the revenue deficit, which has been reduced from 3.9 per cent in 2022–23 to 2.8 per cent in the revised estimates for 2023–24 and to a budgeted 2 per cent in 2024–25. Overall, the trend in all deficits is declining after COVID-19 with a margin increase in effective revenue deficit in 2023–24. The Centre’s capital expenditure, which increased by 28.4 per cent in 2023–24, is projected to grow by 16.9 per cent in 2024–25. This fiscal consolidation, which redirects spending from subsidies and current outlays towards asset-creating capital expenditure, is beneficial, especially ahead of elections. The four primary drivers of economic growth are private consumption, private investment, exports, and government expenditure. However, the expansion in government spending has not boosted private investment as per the conventional Keynesian prescription. Without that, there can be no sustained formal job creation leading to higher incomes and consumption. Despite the pandemic, IT services and start-ups performed well. However, their combined headcount fell to 15.4 lakh in December 2023. Start-ups are also facing a funding winter due to the drying up of easy money from low global interest rates.
The budget also prioritised infrastructure, agriculture, green growth, and railways, but no tax rate changes were made, disappointing salaried individuals. The key expectation was to increase allocations for urban schemes like Pradhan Mantri Awas Yojana (PMAY) (Urban) to enhance affordability and promote new projects, but no major announcements were made in the interim budget. The interim budget did not directly address real estate sector demands, but the upcoming Union Budget may include more concrete measures to address industry concerns and potentially influence market trends. Overall, it has been a simple vote-on-account exercise, seeking Parliament’s approval for routine expenditures till the next full-fledged budget is presented.
Some Key Terms Mentioned in the Interim Budget
- Capital budget outlines the government’s investment and financing activities for long-term projects and assets, encompassing both capital receipts and capital expenditures.
- Capital receipts refers to the government’s earning either by creating liabilities (borrowing) or reducing financial assets (disinvestment).
- Capital expenditure refers to the government’s expenditure for reducing liabilities (loan payment) or creating assets (investment in infrastructure like land, machinery, etc).
- Revenue budget includes revenue receipts and revenue expenditures. It covers ongoing government operations, debt interest, and subsidies, reflecting the day-to-day functioning and financial transactions of the government.
- Revenue receipts is the revenue that the government receives without incurring debts or losing valuable assets for a financial year, such as, taxes, interest on loans, etc.
- Revenue expenditure is the money government spends without incurring debts or losing valuable assets for a financial year, such as, salaries, pension, subsidies, etc.
- Fiscal deficit (FD) is the difference between Revenue Receipts plus Non-Debt Capital Receipts (NDCR) and the total expenditure. It reflects the government’s overall borrowing requirement.
Fiscal Deficit = Total Expenditure – (Revenue Receipts + Non-debt capital receipts). - Revenue deficit (RD) is the excess of revenue expenditure over revenue receipts.
- Effective revenue deficit (ERD) is the difference between revenue deficit and grant-in-aid for creation of capital assets.
- Primary deficit (PD) is measured as fiscal deficit less interest payments.
- Budget estimates are projected funds allocated to various ministries, departments, sectors, and schemes in the union budget. It determines expected costs and outlines how the allocated money will be utilised over a specified time period.
- Revised estimates are adjustments made by the government to the union budget based on evolving financial needs, as some ministries or departments may require more funds than initially anticipated in the initial budget estimate.
- Vote-on-account, mentioned under Article 116 of the Indian Constitution, allows the government to withdraw funds from the Consolidated Fund of India to meet its immediate expenditure needs for a limited period of time.
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