As the Indian government prepares to unveil its upcoming 2024-25 Budget, anticipation looms large in the aviation sector regarding key priorities ranging from infrastructure enhancements to sustainability initiatives. With recent strides such as the expansion of airports and introduction of new air routes, stakeholders eagerly await how fiscal policies will support continued growth and address challenges like regulatory frameworks and operational costs.
Amidst these expectations, the sector looks forward to initiatives that not only bolster connectivity but also promote environmentally responsible practices, reflecting a broader commitment to sustainable development goals.
Proactive aviation infrastructure development
Finance Minister Nirmala Sitharaman in her 2024 Interim Budget address on February 1 highlighted significant strides in India’s aviation sector in the past 10 years. During the budget presentation, Sitharaman discussed the government’s plans to proactively develop the aviation infrastructure in the country.
“The number of airports has doubled to 149, with Indian carriers ordering over 1,000 new aircraft. The UDAN scheme has notably expanded air connectivity to Tier-II and Tier-III cities, facilitating 517 new routes serving 13 million passengers,” Sitharaman said.
This growth is credited to forward-thinking government initiatives, prominently the RCS-UDAN program introduced in 2016, which aims to bolster connectivity by revitalising airstrips and airports, especially in underserved regions.
Furthermore, the government has prioritised sustainability in the aviation sector, exemplified by Delhi and Mumbai airports attaining Level 4+ Carbon Accreditation. This underscores their dedication to minimizing carbon footprints and advancing responsible aviation standards.
Budget cut for DGCA and UDAN scheme in interim Budget
In the interim Budget for 2024-25, the Ministry of Civil Aviation’s budgetary allocation has been reduced to Rs 2,300 crore, down from Rs 2,922.12 crore in the revised estimate for the current fiscal year. This allocation includes a revenue component of Rs 2,257.79 crore. The budget documents indicate decreased allocations for key regulatory bodies, with the Directorate General of Civil Aviation (DGCA) receiving Rs 302.64 crore, down from Rs 397.55 crore, and the Bureau of Civil Aviation Security (BCAS) allocated Rs 89 crore, reduced from Rs 100.02 crore.
Furthermore, the budget allocation for the UDAN (Ude Desh Ka Aam Nagrik) scheme, aimed at enhancing regional connectivity in Tier-II and Tier-III cities, has been cut by 60% to Rs 502 crore from the previous year’s Rs 1,244 crore. These reductions come amidst challenges faced by airlines, including aircraft groundings and escalating fuel costs, prompting expectations within the industry for supportive measures such as financial aid or incentives.