Nirmala Sitharaman Presents Interim Union Budget 2024: Check Highlights

The Finance and Corporate Affairs Minister, Smt. Nirmala Sitharaman, presented the Interim Union Budget for 2024-2025 in Parliament on February 1.

• While presenting the interim budget, the minister announced that the capital expenditure outlay for the next year is being increased by 11.1 percent to Rs 11,11,111 crore, which would be 3.4 percent of the GDP.

Growth Projection

• According to the First Advance Estimates of National Income for FY 2023-24, India's real GDP is projected to grow by 7.3%.
• Earlier, the RBI projected growth for FY 2023-24 (in its December 2023 Monetary Policy Committee meeting) from 6.5 percent to 7 percent.
• The Indian economy has maintained healthy macroeconomic fundamentals and demonstrated resilience despite global economic challenges. 
• The World Economic Outlook (WEO) of the International Monetary Fund (IMF) has revised its growth projection for India for FY 2023-24 upwards to 6.3 percent from 6.1 percent projected in July 2023. 
• Such growth reflects increasing global confidence in India’s economic power at a time when the global growth projection for 2023 remains unchanged at 3 percent.
• According to the IMF, India is likely to become the third-largest economy in 2027 (in USD at the market exchange rate).
• Various international agencies, such as the World Bank, IMF, OECD, and ADB, project India to grow between 6.1% and 6.7% by 2024-25.

Key Highlights of the Budget

• Social Justice
• Four major sections - that is, ‘Garib’ (poor), ‘Mahilayen’ (women), ‘Yuva’ (youth) and ‘Annadata’(farmer) are focused.
• Poverty 
  • Over the last 10 years, 25 million people have been lifted out of multidimensional poverty. 
  • The government's direct benefit transfers of Rs. 34 lakh crore using PM-Jan Dhan accounts have resulted in savings of Rs. 2.7 lakh crore. 
  • The PM-SVANidhi scheme has provided credit assistance to 78 lakh street vendors, with 2.3 lakh receiving credit for the third time. 
  • The PM-JANMAN Yojana has been launched to aid the development of particularly vulnerable tribal groups (PVTG). 
  • The PM-Vishwakarma Yojana provides end-to-end support to artisans and craftspeople engaged in 18 trades.
• Agriculture 
  • Additionally, the PM Fasal  Bima Yojana offers crop insurance to 4 crore farmers. 
  • The Electronic National Agriculture Market (e-NAM) has integrated 1361 mandis, providing services to 1.8 crore farmers with a trading volume of Rs. 3 lakh crore. 
  • The Pradhan Mantri Kisan Sampada Yojana has benefitted 38 lakh farmers and generated 10 lakh employment opportunities. 
  • Lastly, the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has assisted 2.4 lakh self-help groups (SHGs) and a certain number of individuals with credit linkages (not specified in the text).
• Women Empowerment
  • Over 30 crore loans have been granted under the Mudra Yojana scheme to women entrepreneurs. 
  • The enrollment of females in higher education has witnessed a growth of 28%. Girls and women constitute 43% of enrolment in STEM courses, which is one of the highest in the world. 
  • Additionally, over 70% of houses under the PM Awas Yojana have been granted to women in rural areas.
• Electricity
  • Under the new scheme, 1 crore households will receive 300 units of free electricity per month through rooftop solarisation. 
  • This initiative is expected to save each household between Rs. 15000 and Rs. 18000 annually.
• Ayushman Bharat
  • All ASHA workers, Anganwadi Workers and Helpers will benefit from the Ayushman Bharat scheme. 
• Research and Development
  • A corpus of INR 1 lakh crore will be established through a fifty-year interest-free loan. This corpus will provide long-term financing or refinancing with low or zero interest rates and long tenors. 
  • Additionally, a new scheme will be launched to strengthen deep-tech technologies for defence purposes and expedite the 'atma nirbharta' (self-reliance) initiative.
• Railways
  • Three main economic railway corridor programs have been identified under the PM Gati Shakti initiative. 
  • These programs will be implemented to improve logistic efficiency and reduce costs. 
  • The three programs are :
    1. The Energy, Mineral and Cement Corridors
    2. Port Connectivity Corridors
    3. High Traffic Density Corridors 
  • Additionally, 40,000 normal rail bogies will be converted to Vande Bharat standards.
• Green Energy
  • By the year 2030, a coal gasification and liquefaction capacity of 100 million tonnes will be established. Additionally, there will be a gradual and mandatory blending of compressed biogas (CBG) with compressed natural gas (CNG) for transportation purposes and with piped natural gas (PNG) for domestic use.
• FDI
  • During 2014-23, there was  FDI inflow of USD 596 billion, which is twice the inflow during 2005-14.
• Reforms in the States for ‘Viksit Bharat’
  • A fifty-year interest free loan of Rs.75,000 crore is proposed to support milestone-linked reforms by the state governments.

Fiscal Deficit 

• Fiscal refers to the government's revenues. Fiscal deficit means the shortfall or deficit the government experiences in non-borrowed receipts, i.e., income, in comparison to its expenditure. 
• If the government's expenditure exceeds its non-borrowed receipts, then the difference between the total expenditure and the total non-borrowed receipts is known as its fiscal deficit. 
• Generally, it is expressed as a percentage of the country's GDP.

Revenue Deficit

• When a government's revenue expenditure exceeds its revenue receipts, it results in a revenue deficit. This implies that the government's income is insufficient to cover its day-to-day functioning.
• Primary Deficit = Fiscal Deficit – Interest payments on the previous borrowings made by the government. 
• To put it simply, a primary deficit is the difference between the fiscal deficit of the current year and the interest paid on the government's previous borrowings.

Interim Budget

• During an election year, the incumbent government is unable to present a complete budget. Instead, the finance ministers present an interim budget that covers the government's expenses and revenues for a short period of time. 
• This is done until a new government is elected and assumes power. The interim budget is presented at the same time as the Union budget would be in a regular financial year.

About Union Budget

• The Union Budget is a financial statement that outlines the government's expected revenue and expenditure for a particular year, as per Article 112 of the Indian Constitution. 
• The budget is prepared for the period between April 1 and March 31 each year and is divided into two categories: revenue budget and capital budget.
• The 2017-18 Union Budget was groundbreaking in many ways, as it moved the budget presentation date from the end of February to the first day of February. Additionally, the Railway Budget was integrated with the Union Budget in 2017.

History of the Union Budget of India

• India's first budget was presented on April 7, 1860, during the time of British colonial rule. James Wilson, who was the Finance Minister of India at the time, introduced it. 
• Sir R.K. Shanmugham Chetty, the first Finance Minister of Independent India, presented the first Budget of Independent India on November 26, 1947.
• It is worth noting that this budget was presented amidst widespread riots due to the partition of India. 
• The budget was meant for seven and a half months, and the next budget was to be implemented on April 1, 1948. For the first time, it was decided that both India and Pakistan would share the same currency until September 1948.
• After Sir Chetty resigned as the Finance Minister of India, John Mathai took over and presented the subsequent Union Budgets for 1949-50 and 1950-51. 
• The budget of 1949-50 was the first instance of a budget being prepared for a United India, including all princely states.