Budget 2024 Highlights: Nirmala Sitharaman presents Interim Budget 2024

Finance Minister Nirmala Sitharaman visited President Droupadi Murmu on Thursday before presenting the pre-election Budget for 2024-25, following the established tradition of meeting the President at Rashtrapati Bhavan before heading to Parliament. In a post on X (formerly Twitter), Rashtrapati Bhawan stated, ” Union Minister of Finance and Corporate Affairs Smt Nirmala Sitharaman along with Ministers of State Dr Bhagwat Kishanrao Karad and Shri Pankaj Chaudhary and senior officials of the Ministry of Finance called on President Droupadi Murmu at Rashtrapati Bhavan before presenting the Union Budget.” President Murmu conveyed her best wishes to the finance minister. Subsequently, the Union Cabinet convened to approve the Budget before its formal presentation in Parliament. Prime Minister Narendra Modi heads the Cabinet, which will finalize the Budget for the fiscal year 2024-25.

Here are the crucial figures to monitor in the pre-election Budget for 2024-25:

Fiscal Deficit: The budgeted fiscal deficit for the current fiscal ending March 2024 is 5.9%, down from 6.4% in the previous fiscal. Eyes will be on the 2024-25 fiscal deficit as expectations rise for increased government spending in an election year.

Disinvestment/Privatisation: The anticipated disinvestment target for the current fiscal might be missed, as in the past five years. A realistic target below Rs 50,000 crore is expected for the next fiscal.

Capital Expenditure: The government’s planned capital expenditure for the current fiscal is set at Rs 10 lakh crore, up from Rs 7.3 lakh crore in the previous fiscal. The focus on infrastructure development and state-level capex incentives continues.

Tax Revenue: The Budget aimed for direct and indirect tax collections of Rs 18.23 lakh crore and Rs 15.29 lakh crore for the current fiscal, totaling Rs 33.61 lakh crore. Buoyant GST, income, and corporate tax collections are anticipated to exceed the budget estimates.

Borrowing: The government’s gross borrowing budget for the current fiscal is Rs 15.43 lakh crore. Market attention will be on borrowing figures, especially considering expected higher capital expenditures for growth and potential populist announcements.

Nominal GDP: The estimated nominal GDP growth (real GDP plus inflation) for the current fiscal is 11%. The Budget is expected to provide an outline of nominal GDP growth numbers. Real GDP growth is projected at 7.3% for the current fiscal and 7% for the next.

Key Spending Areas: Focus will be on spending in critical schemes such as NREGA and key sectors like health and education. These areas are likely to be under the spotlight for budget allocations.

The Government of India (GOI) has hydrogen production as a top priority, said Suhas Dixit, founder, APChemi Pvt Ltd.

In the Interim Budget 2024, we hope this will be reflected through funding for Green Hydrogen Clusters, Performance Linked Incentives (PLIs), and Waste Management initiatives.

In recent years, India has set ambitious clean energy targets with an aim to become a global leader in the clean energy space, said Sukhmeet Singh, founder of A2P Energy and Clean Energy Trade.

However, achieving these will need considerable investment and innovation which will be clearly visible in the Union Budget this year, he added.

Cleantech should get more attention from the Government of India, said Mahi Singh (Co-Founder, Cancrie) and added that this has a direct effect on “our mission to net-zero”.

This is to speed up growth and lead the wave of climate action, Singh said.

In the Interim Budget 2024, we may see a shift towards ensuring active accessibility of affordable, collateral-free loans for deserving women entrepreneurs, building upon initiatives led by SIDBI and select public sector banks, said Kalpana Ajayan, Regional Head (South Asia), Women’s World Banking.

This bold stance involves a multifaceted strategy wherein Microfinance Institutions (MFIs), LendTech, and Non-Banking Financial Companies (NBFCs) will be motivated to reduce interest rates with provided credit guarantees, Ajayan added.

We hope that the Government of India (GOI) will continue with thrust on fiscal consolidation, easements of business and taxation laws, infrastructure, MSMEs, and financial inclusion, said BK Bajaj, CEO, Informerics.

To accelerate the demographic dividend for higher productivity levels, India needs to fuel young people with good nutrition, said Mini Varghese, Country Director – India, Nutrition International.

As part of government programs, the Interim Budget 2024 could invest in building health and nutrition components, he said.

Hopefully, the government will continue to increase investments in the First 1000 Days program and maternal nutrition.

In integrating SMEs from Tier 2 and 3 cities into the digital marketplace, the Open Network for Digital Commerce (ONDC) has proven instrumental, said Sudarshan Chari, Executive Director and Head of SME Banking, DBS Bank India.

The Interim Budget 2024 can boost this foundation by introducing new avenues for Small and Medium Enterprises to grow and enhance e-commerce integration, he added.

In the Interim Budget 2024, we expect a continued focus on supporting MSMEs in the country, said Sudarshan Chari, Executive Director and Head of SME Banking, DBS Bank India.

Concerted steps to include all MSMEs in Udyam will be important, allowing them to access not only government schemes but also incentives and formal credit channels, said Sudarshan.

Amidst strong infrastructure development, cement industry strong demand, prompted by increased budgetary support for roads, railways, rural projects, and further boosted by initiatives like PMAY, said Arun Shukla, President and Director, JK Lakshmi Cement.

Government’s attention is needed to help address rising input costs through GST rationalization and relaxing import duties on key materials like coal and petcoke, he added.

Also, budgetary backing for sustainable practices and manufacturing innovation is necessary, he further said.

During the transitional phase, even though interim Budget 2024 will serve as a temporary financial plan to meet essential expenditures and maintain the functioning of government, the country may see adjustments in Direct taxes during this period, said Dhaval Selwadia, Partner, Direct Tax, N.A. Shah Associates.

Here’s what Selwadia expects:

a) In the New Tax Regime, inclusion of deduction u/s 80D

b) Extending sunset provisions in the IT Act in connection with new manufacturing entities

c) Higher interest deduction cap u/s 24(b) to ease the burden of homeownership

d) To redefine affordable housing, increasing the cap on stamp duty of a residential unit u/s 80-IBA.

The smartphone industry benefits from many government support, PLI schemes, and manufacturing incentives, said Arjun Bajaj, Director, Videotex.

However, this is not the case with the television manufacturing sector, he added.

Government’s assistance in this regard could drive industry growth, create better job possibilities, and contribute positively to the economy of the country, Bajaj emphasized.

In 2024, the demand for consumer durables is bound to pick up, and with the beginning of summer, it is expected to rise, said Pradeep Bakshi, MD & CEO, Voltas Limited.

The industry believes that the proactive initiatives of government related to Digitalization and Make in India initiatives will provide the much-needed momentum in the right direction for increasing employment and creating global competitiveness for Indian players, he added.

Presently, TVs larger than 32 inches are classified under the luxury segment, attracting a GST of 28 per cent, said Arjun Bajaj, Director, Videotex.

Nevertheless, in the current scenario, TVs are no longer just luxury items and have become necessary household components, said Bajaj.

Lowering the GST on these larger TVs could lower prices, potentially increasing sales and promoting growth in the television industry, he added.

Last year, the Budget had heightened industry expectations by lowering import duties on open-cell components, a key element in television manufacturing, by 2.5 per cent, said Arjun Bajaj, Director, Videotex.

While this action initially lured major players with optimistic plans for domestic open-cell manufacturing, no significant progress has materialized, Bajaj said.

Despite these developments, this sector still heavily relies on imports for open cells, he said.

The industry expects that the government will take the required steps to streamline the supply chain, Bajaj added.

In Union Budget 2024-25, hoteliers are expecting a more lenient tax structure and an increased allocation, which will give a boost to the tourism industry.

The trade department of India is advocating for a reduction in taxes on hybrid cars. India may opt for limited privatisation of state-owned enterprises, with modest targets for divestment proceeds. India is considering a reduction in import tariffs on gold bars, supported by the country’s trade ministry.

With Budget 2024 on the horizon, India‘s education sector finds itself at a critical crossroads, offering a significant opportunity for impactful investments that can empower the generations to come. Nevertheless, moving forward necessitates decisive steps and focused allocation of resources, particularly in addressing key areas that urgently require attention.

India is likely to maintain its gross borrowings for the fiscal year 2024-25 at a similar level to the current year, which could have a positive impact on the local bond markets.

Expectations suggest that fertiliser and food subsidies for the upcoming fiscal year starting April 1 will likely remain unchanged from the current year’s levels.

Despite geopolitical risks stemming from the Red Sea crisis, the nation anticipates a growth rate of approximately 7% in the upcoming fiscal year, although growth has been inconsistent.

The annual payout to female farmers who own land is expected to double. The flagship federal housing scheme offering low-cost loans is set to be extended.

The upcoming interim budget is anticipated to break away from the trend of heavy spending on new initiatives aimed at garnering votes and instead prioritise infrastructure development. India aims to reduce its budget deficit by at least 50 basis points in the fiscal year 2024/25, while simultaneously increasing capital expenditure by up to 20%.

Hoteliers are anticipating a more accommodating tax regime and a higher allocation in the upcoming Union Budget 2024-25, aiming to invigorate the tourism industry. Amandeep Singh Grover, the General Manager of Hilton Goa, expresses optimism for reforms that would harmonize services across the tourism sector. He envisions initiatives that streamline procedures, improve infrastructure, and guarantee a uniform and superior experience for visitors. Grover emphasizes that standardization would not only enhance the overall allure but also establish the country as a more appealing destination for travelers, fostering growth and sustainability in the hospitality sector.

A new budget will replace the interim one once the new government is formed following the elections scheduled for April-May.

Assessing index valuations is pivotal for making informed investment decisions as the Interim Budget 2024 approaches. Overlooking this aspect can lead to misconceptions about market conditions, potentially deeming them overvalued and unsuitable for investment. Currently, the Nifty‘s Price-to-Earnings (PE) ratio stands at 23, with the one-year forward PE at 19. Compared to the 33-year average PE of 25, this suggests a 24% discount to fair value, indicating potential for upward movement. Moreover, with a robust GDP growth rate of 7.3% and an earnings trajectory projected between 25 to 30%, the valuation presents a compelling opportunity for investment, promising desired returns.

As anticipation builds for the Interim Budget 2024, there’s a sense of expectation within corporate circles regarding potential adjustments to tax rates and incentives by Finance Minister Nirmala Sitharaman. Despite being a vote-on-account budget, the hope is that such measures will sustain economic momentum, especially with an eye on the upcoming General Elections. Deloitte India‘s panel of experts shared insights with FinancialExpress.com, reflecting an optimistic outlook fueled by factors such as infrastructure improvements, strong corporate earnings, and positive equity market sentiments. Read more

Also Read | Interim Budget 2024: Date, time and where to watch FinMin Nirmala Sitharaman’s budget speech live