Budget 2024 Date Highlights: FM Nirmala Sitharaman likely to table Union Budget on July 23 or 24. Check all details here

The first Budget of India was presented in 1860 by Scottish economist James Wilson, who introduced the collection of income tax. Independent India’s first Budget was presented by Finance Minister RK Shanmukham Chetty on November 26, 1947, three months after the country gained independence.

Trade union leaders presented several key demands during a pre-budget meeting with Finance Minister Nirmala Sitharaman. They called for the constitution of the 8th pay commission, increased tax rebates for the salaried class, and the restoration of the old pension scheme (OPS). The unions urged the government to halt the privatisation of public sector undertakings (PSUs) and scrap the new pension scheme in favor of OPS.

Additionally, they proposed a significant increase in the income tax rebate ceiling for salaried employees and gratuity. The unions also demanded the establishment of a government-sponsored social security fund for unorganised and agricultural workers, ensuring universal social security schemes, including a minimum pension of Rs 9,000 per month and other benefits. Furthermore, they insisted that all existing vacancies in central government departments and PSUs be filled immediately and that the practice of contract and outsourcing be stopped.

Exporters are expected to seek fiscal support in their pre-budget meeting with Finance Minister Nirmala Sitharaman to boost the country’s exports to USD 2 trillion by 2030, according to an industry official. India‘s exports of goods and services rose from USD 478 billion in 2017-18 to USD 778 billion in 2023-24. “The goal is to reach USD 2 trillion (USD one trillion each for goods and services) by 2030. This ambitious target is achievable with additional efforts from exporters and government support,” the official stated. Exporters may request fiscal incentives to promote research and development, an extension of the Interest Equalisation Scheme, and marketing support through the Market Access Initiative (MAI).

(PTI inputs)

Here’s what industry leaders asked Finance Minister Nirmala Sitharaman in the pre-budget meeting:

– Industry representatives urged Finance Minister Nirmala Sitharaman to reduce indirect taxes and rationalize duty structures.

– FIEO President Ashwani Kumar called for a five-year extension of the Interest Equalisation Scheme.

– Kumar suggested restoring subvention rates from 3% to 5% for MSME manufacturers due to rising interest rates.

– He also proposed establishing a global Indian shipping line to reduce dependency on foreign shipping and save foreign exchange.

– Ajay Sardana from Reliance Industries highlighted the need to review tariffs on Chinese imports to curb dumping and boost domestic capacity.

– Shree Cement Chairman HM Bangur advocated for increased government capital expenditure and expedited environmental clearances.

– Nasscom’s Ashish Aggarwal requested easing transfer pricing regimes and enhancing the safe harbour threshold to Rs 2,000 crore.

– Gujarat Chamber of Commerce Vice President Sandeep Engineer sought relaxation in the 45-day payment window, changes to MSME definitions, and tax rationalization for LLPs and high net-worth individuals.

The Council for Leather Exports (CLE) on Tuesday urged the government to extend the Production-linked Incentive (PLI) scheme for the leather and footwear sector. During a pre-budget meeting with Finance Minister Nirmala Sitharaman, CLE Chairman Rajendra Kumar Jalan emphasized the potential of the PLI scheme to boost job creation, domestic manufacturing, and exports.

Jalan highlighted the need for import duty exemptions on wet blue, crust, and finished leather, stating that the PLI scheme could transform the industry into a significant manufacturing hub. He noted that the scheme would attract substantial domestic and foreign investments, modernize and expand existing units, and support start-ups.

“Implementing PLI will lead to an incremental investment of Rs 6,000 crore and generate employment for approximately 2 million workers, both directly and indirectly,” Jalan stated. He believes this move will expand the sector’s overall production base and enhance India‘s global manufacturing stature.

(PTI inputs)

The World Bank, in its June Global Economic Prospects report, said that India will remain the fastest-growing of the world’s largest economies although its pace of expansion is expected to moderate with a steady average annual growth of 6.7% between FY25 and FY27. It raised India’s growth projection by 0.2 percentage points each to 6.6% for FY25 and 6.7% in FY26 compared with its projection in January this year. This is, however, way below the 7.2% projected by the Reserve Bank of India last week.

India’s factory output growth, as measured by the Index of Industrial Production (IIP), fell to a three-month low of 5% in April as against 5.4% in March due to a drop in manufacturing activity, data released by the National Statistical Office (NSO) showed. Manufacturing output’s growth during April eased to 3.9% from 5.8% in March, whereas mining growth rose to 6.7% from 1.3%. Electricity output’s growth also increased to 10.2% in April from 8.6% in March.

India’s CPI inflation is expected to ease further in July and August 2024 after it fell to 4.75 per cent in May from 4.83 per cent in April, on early onset of the Southwest Monsoon. Economists also maintained FY2025 average inflation estimate at around 4.4 per cent.

The Southwest Monsoon has seen an early onset in Kerala (June 1) and Northeast India (June 5) by two and six days, respectively, over the normal onset date. The rain marks the commencement of its four-month sojourn which brings in 75% of the country’s annual rainfall.

India’s retail inflation, based on the Consumer Price Index (CPI), fell to a 12-month low of 4.75% in May from 4.83% in April. This was driven mainly due to the high base effect and easing food prices, data released by the National Statistical Office (NSO) showed.

Food inflation during May decreased marginally to 8.69% from 8.70% in April. The drop in inflation was witnessed in spices, meat and fish, sugar, milk and products, and even vegetables, though slightly.

RBI Governor Shaktikanta Das, in the minutes of the meeting released recently on the MPC meeting held earlier this month, said that the RBI MPC must continue with its actively disinflationary policy stance as food inflation continues to be higher. “With persistently high food inflation, it would be in order to continue with the disinflationary policy stance that we have adopted (withdrawal of accommodation). Any hasty action in a different direction will cause more harm than good. It is important that inflation is durably aligned to the target of 4%,” he said.

With inflation only modestly above target, the risk of it rising to a very high level is low, said monetary policy committee’s (MPC) external member Jayanth Varma. “I expect that inflation will hit the target on a sustained basis in 2025-26, but even in 2024-25, it would be only modestly above target,” he said. Read more.

The Centre has sanctioned Rs 15,000 crore and released Rs 10,000 crore as untied interest-free capex loans to the state governments so far in the current financial year. Of the Rs 1.3 trillion capex support provided for states in the interim budget for FY25, Rs 55,000 crore in untied capex loans, rolled out from April 1. The reform/project linked Rs 75,000 crore loans would be rolled out after the government presents the Union Budget next month.

India’s current account balance recorded a surplus of $5.7 billion or 0.6% of the GDP in Q4FY24 as against deficits of $8.7 billion (1%) in the previous quarter, and $1.3 billion (0.2%) in the year-ago period, the RBI said. The last time the account saw a surplus was in Q1FY22 (0.9% of GDP).

The merchandise trade deficit at $50.9 billion in Q424 was lower than $ 52.6 billion a year ago.

The government has reduced windfall tax on domestically-produced crude oil to Rs 3,250 per tonne from Rs 5,200, with effect from June 15. The tax is levied in the form of Special Additional Excise Duty (SAED). SAED on export of diesel, petrol and jet fuel or ATF, has been retained at ‘nil’.

India’s wholesale price index (WPI)-based inflation accelerated for the third consecutive month to 2.61 percent in May. This is primarily driven by an increase in prices of food articles, manufacturing of food products, crude petroleum and natural gas, mineral oils, and other manufacturing, said the provisional data released by the Ministry of Commerce & Industry. In April, WPI inflation was at 1.26 per cent.

Fitch Ratings has raised India’s GDP growth projection for the current financial year to 7.2% from an earlier estimate of 7%, mainly due to the assumption of recovery in consumer spending. In its June ‘Global Economic Outlook’ report, the global ratings agency said that investments will continue to rise but “more slowly” than in recent quarters in FY25, while consumer spending will “recover with elevated consumer confidence”.

This is in line with the RBI’s forecast of 7.2% for the current fiscal year, but much higher than the International Monetary Fund’s (IMF) projection of 6.8%.

While the blog, till now, stated facts about and speculations on the probable date when the finance minister Nirmala Sitharaman is expected to present the Union Budget, let’s have a look at the state of Indian economy and various economic metrics that will affect the announcements in the Budget document. These include the inflation figures, GDP growth, fiscal deficit, among others.

Despite high security, the Union Budget was leaked in 1950, when John Mathai was the finance minister. The incident led to the printing of the Budget shifting from Rashtrapati Bhawan to Minto Road. And later, after 1980, the budget printing process shifted to the North Block basement.

The Union Budget was always presented at 5 pm on the final day of February and this practice was inherited from British India. During the colonial era, the Budget was presented in Britain at 11 am (local time), which corresponded to 5 pm in India.

However, later in 1989, Yashwant Sinha proposed that the Union Budget should be presented at 11 am. He was the finance minister in the Atal Bihari Vajpayee-led NDA government. This was done so that there was sufficient time for a more thorough analysis of the numbers, leading to more informed debates and discussions.

The rationale behind this change was to allow sufficient time for a more thorough analysis of the numbers, leading to more informed debates and discussions.

The Union Budget was always presented at the end of the month of February. However in 2017, Arun Jaitely ended the 92-year old practice. He declared that the Union Budget will not be presented on the final working day of February, as was the practice during the colonial period, but on February 1. The tradition had originated in the 1860s when officials of the East India Company introduced it in India. Arun Jaitley had mentioned that as the Budget was presented at the end of February, the government used to get very little time to prepare for the new policies and changes that would take effect from April 1.

India Inc, during the pre-Budget consultation with Finance Minister Nirmala Sitharaman, emphasised on several key priorities for the upcoming Union Budget. These included reducing the tax burden on the common man, sustaining capital expenditure, and implementing measures to curb food inflation. Additionally, industry leaders and associations urged the government to prioritize infrastructure development to uphold economic growth, while also underscoring the importance of supporting the MSME sector, crucial for both the Indian economy and employment generation.

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is an initiative by the central government launched to provide direct income support of Rs 6,000 annually to small and marginal farmers. The support is disbursed in three equal installments directly into the bank accounts of eligible farmers. The scheme aims to ensure financial assistance to farmers between crop cycles and promote sustainable agricultural practices across India.

From institutional landholders to people receiving monthly pensions of Rs 10,000 to professionals like lawyers, doctors, engineers and more are excluded from the PM-KISAN scheme.

Finance Minister Nirmala Sitharaman highlighted these major announcements made in the Interim Budget:

In her interim budget speech on February 1, Finance Minister Nirmala Sitharaman provided Rs 86,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme, retaining it at the same level as provided for in the revised estimate for 2023-24.

She pointed out that the CAG has already commented on the way MGNREGA is operating in some States, where claims are reaching a stage where they need to be verified. “Are they [those getting wages] really people existing on the ground?…and other questions critical to the very letter and spirit of the program.”

During the interim budget presentation earlier in February, Finance Minister Nirmala Sitharaman had said that the government has set a fresh record for infrastructure outlay by earmarking Rs 11.11 lakh crore, topping the existing high of Rs 10 lakh crore allocated during fiscal 2023-24. This amounted to 3.4 per cent of the GDP. With this, the country sets its eyes on goals of faster access-controlled highways, super-efficient ports, safer and speedier trains, with cleaner, and decongested cities.

– A uniform rate of 5% IGST will be applied to imports of aircraft parts, components, testing equipment, tools, and toolkits, regardless of their HS classification, to boost MRO activities, subject to specified conditions.

– All milk cans made of steel, iron, or aluminum will attract 12% GST.

– A 12% GST rate is recommended for all types of carton boxes and cases, whether made from corrugated or non-corrugated paper or paperboard.

– All solar cookers, whether single or dual energy source, will attract 12% GST.

– The council clarified that all types of sprinklers, including fire water sprinklers, will attract 12% GST.

Reserve Bank Governor Shaktikanta Das stated that timely actions on unsecured loans have effectively moderated their growth. He remarked, “We believed it was prudent to act proactively and decelerate credit growth in these segments.”

“After the introduction of GST, goods for household use have become much cheaper,” Prime Minister Modi posted on “X” (formerly Twitter).

He also highlighted that the implementation of GST has resulted in increased savings for the poor and common man. Taxes were reduced on essential household items such as flour, curd, and detergent, making daily necessities more affordable.

Nirmala Sitharaman formally took office as the Finance and Corporate Affairs Minister on June 12. She emphasized the government’s dedication to ensuring ‘Ease of Living’ for all citizens and pledged to continue implementing measures to achieve this goal.

Sitharaman, known for advancing second-generation reforms during her previous term, is set to make history by presenting her seventh consecutive Budget and her sixth full Budget in a row.

On February 1, 2021, Finance Minister Nirmala Sitharaman presented the first paperless Budget using a digital tablet due to the outbreak of COVID-19 in India. In 2019, the finance minister introduced a traditional twist to the budget presentation by replacing the traditional briefcase with a red-colored bahi khata. This change marked her first Budget presentation.