Union Budget 2024 Expectations Highlights: Union Finance Minister Nirmala Sitharaman is set to present the Budget for the financial year 2024-25 in the Lok Sabha on July 23. Income tax relief is one of the key aspects that most are looking forward to. Especially, given how ‘miffed’ the middle-class is, the popular assumption and expectation this Budget is that the Modi 3.0 Cabinet will use the Budget to woo back the support it lost during elections.
This apart demand for tax holidays and GST exemption by a host of industries also features prominently on the Budget wishlist.
There are also expectations that the Finance Minister will perhaps be generous in terms of allocation for welfare schemes and public capex given the windfall dividend payout by the RBI and the challenges of balancing coalition partners and their expectations.
All eyes are now on July 23 when Nirmala Sitharaman will table the Budget in the Parliament during the Monsoon Session that kickstarts on July 22. For live coverage and updates on all news related to the Budget, follow Financial Express Online.
Saurabh Uboweja, Managing Partner and Practice Leader, Positioning Strategy, BOD Consulting, said, “We are highly optimistic for the upcoming Union Budget expected to be announced in July which holds the promise of being a transformative moment for startups and MSMEs. With the ambitious target of achieving a $5 trillion GDP by 2027-28, this Budget has the potential to pave a progressive path forward.”
Optimistic about the government’s push towards empowering the entrepreneurial spirit of India, Saurabh Uboweja said, “Enhanced access to funding, simplified regulations, and support for digital transformation could be game-changers for the startup ecosystem and small businesses alike. The Budget’s focus on fostering innovation and growth in these sectors can accelerate our journey toward economic prosperity, making this an exciting time for startups and MSMEs to grow and contribute significantly to the nation’s ambitious goals.”
Jitin Bhasin, CEO and Founder, SaveIN, said, “Ensuring clarity in regulatory environments is paramount for startups, particularly within the fast-evolving fintech sector. The continuous flux in this landscape highlights the critical importance of stable and transparent policies. The introduction of targeted provisions within budgetary frameworks could substantially enhance the viability and growth prospects of startups.” From an investment standpoint, he added, creating an enabling policy environment is essential to attract foreign capital, thereby fortifying India‘s startup ecosystem and reinforcing its position on the global stage. “The Budget is likely to address financial inclusion as a critical aspect, with the announcement of a streamlined credit platform emphasizing the Reserve Bank of India‘s commitment to facilitating easy access to credit for small businesses and individuals,” he said.
Commerce and Industry Minister Piyush Goyal said that India’s exports have recorded a healthy growth in May. He added that it remained in the positive zone in June and the first quarter of the financial year despite global challenges. Further, he added that growth in the services sector is helping the country’s outbound shipments to record positive growth rates. India’s merchandise exports rose 9.1 per cent to Rs 38.13 billion in May. During April-May this fiscal, the outbound shipments grew by 5.1 per cent to Rs 73.12 billion.
(With inputs from PTI)
Punit Sindhwani, Founder & CEO, PAXCOM, said, “The IT sector looks forward to the upcoming Budget, seeking enhanced R&D incentives to boost innovation and global competitiveness. Expanding the PLI scheme is vital for driving domestic manufacturing. Addressing the Angel Tax by raising investment thresholds is crucial for supporting startups.” He further added that greater funding for STEM education, upskilling programs, and expanded visa regimes is imperative for accessing skilled talent. Investing in digital infrastructure is essential for adopting new technologies. On tax laws, Punit Sindhwani said, “Simplifying tax laws and digitizing compliance will create a more business-friendly environment. We are optimistic that the government will support these key areas to foster IT industry growth.”
On Thursday, the Union Finance Ministry declared that the 8.25% annual interest rate for provident fund deposits had been approved. The Employees’ Provident Fund Organisation (EPFO) announced the interest rate for the 2023–24 fiscal year in February of this year. The interest rate for 2023–24 was raised by the EPFO from 8.15% to 8.25% from the previous year. The decision to revise the rates has an effect on millions of EPF members nationwide.
It is anticipated that Finance Minister Nirmala Sitharaman may provide some major relief to middle-class and salaried class for the first time in seven years after the Interim Budget 2024 failed to make any major tax or middle-class announcements.
Amit Jain, Global CEO, Sterling and Wilson Renewable Energy said that the green energy sector is witnessing a paradigm shift, driven by strategic government initiatives and innovative financial instruments. The Production Linked Incentive (PLI) schemes aim to boost domestic manufacturing and create a competitive edge for Indian companies in the coming years.
“We hope that the government will revise the GST rates for renewable energy components, reducing it to 5% (from current 18 %), thereby significantly lowering the cost structure for green energy projects. This will also increase the affordability and attractiveness of renewable energy investments, promoting faster adoption across the country. Higher capital expenditure, evidenced by the government’s plan to invest over $360 billion in renewable energy infrastructure by 2030, highlights the commitment to expanding the country’s renewable energy mix and enhancing grid capabilities. Green bonds have emerged as a powerful tool, with India issuing over $21 billion in green bonds as of February 2023,” he added.
The government is planning to restructure more than 200 state-owned businesses in order to increase their profitability, abandoning Prime Minister Narendra Modi‘s plodding privatisation initiative, Reuters reported.
Prior to the general election, the 2021 plan to privatise a portion of India‘s $600 billion public sector had stalled and was now encountering additional difficulties. On July 23, Finance Minister Nirmala Sitharaman is anticipated to present the updated plans in the yearly budget. Two individuals who are aware with the policy said that the plans entail selling significant portions of the companies’ underutilised land and making money off of other assets.
The government is likely to announce a host of measures aimed at boosting domestic production of pulses and oilseeds, including 100% procurement of three variety of pulses at the minimum support price (MSP) in the coming Budget. The move is expected to reduce reliance on imports, aid crop diversification, and increase farmers’ income.
During its third term, the Modi government will focus on creating more employment in the Media and Entertainment industry, said Minister of Information and Broadcasting Ashwini Vaishnaw during an event on Saturday. “We will be focusing on creating more employment in the Media & Entertainment industry,” said Vaishnaw at the curtain raiser for WAVES 2024.
“We call upon the government to significantly boost support for the renewable sector, pivotal for driving innovation and ensuring efficient project execution. A skilled workforce is crucial to meet escalating demands and push technological boundaries forward. Seamless integration of renewable sources into a resilient grid infrastructure will enhance national reliability and resilience. Robust regulations for C&I sector will not only attract investments but also streamline operations, fostering sustainable growth. We expect increased support in the solar sector through adequate funding and favourable policies, essential for driving innovation and expanding clean energy deployment. Despite challenges such as high initial costs and regulatory complexities, robust incentives and streamlined processes are imperative to make solar power more accessible and affordable. This strategic focus will propel India towards a brighter, greener future, reinforcing our global leadership in clean energy innovation and sustainability,” Neerav Nanavaty, CEO at BluPine Energy said.
According to budget documents, the government’s revenue composition reveals that the highest share, 28%, comes from Borrowings and Other liabilities. Income Tax follows at 19%, closely trailed by Goods and Services Tax (GST) at 18%.
The personal finance sector from the upcoming budget expects to prioritise the twin engines of growt, that is rural India and the middle class. The government’s focus on providing incentives to these sectors is imperative for giving a push to the consumption which has shown signs of recovery but remains below its potential.
“Post-COVID, there is not much increase in the disposable income of rural India. A government initiative in this year’s budget can potentially unlock significant economic value by uplifting rural India.
Moreover, adjusting the tax slabs, particularly expanding the 20 per cent tax bracket for the middle-income range, could act as a catalyst for consumption. This will help increase the disposable income of the middle class as well, leading to growth in both spending and savings,” Manish Kothari, Co-Founder and CEO, ZFunds said.
The provisions made for a scheme or a programme may be spread over a number of Major Heads in the Revenue and Capital sections in a Demand for Grants. In the Expenditure Budget, the estimates made for a scheme/programme are brought together and shown on a net basis on Revenue and Capital basis at one place. Expenditure of individual Ministries/ Departments are classified under 2 broad Umbrellas (i) Centres’ Expenditures and (ii) Transfers to States/ Union Territories (UTs).
Under the Umbrella of Centres’ Expenditure there are 3 13 sub-classification (a) Establishment expenditure of the Centre (b) Central Sector Schemes and (iii) Other Central Expenditure including those on Central Public Sector Enterprises (CPSEs) and Autonomous Bodies.
The Umbrella of Transfers to States/UTs includes the following 3 sub- classification: (a) Centrally Sponsored Scheme (b) Finance Commission Transfers (c) Other Transfer to States To understand the objectives underlying the expenditure proposed for various schemes and programmes in the Expenditure Budget, suitable explanatory notes are included in this volume.
The Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement is presented to Parliament under Section 3 of the FRBM Act, 2003. It sets out the three-year rolling targets for specific fiscal indicators in relation to GDP at market prices, namely (i) Fiscal Deficit, (ii) Revenue Deficit, (iii) Primary Deficit (iv) Tax Revenue (v) Non-tax Revenue and (vi) Central Government Debt. The Statement includes the underlying assumptions, an assessment of the balance between revenue receipts and revenue expenditure and the use of capital receipts including market borrowings for the creation of productive assets.
It also outlines for the ensuing financial year, the strategic priorities of the Government relating to taxation, expenditure, borrowings, guarantees etc. The Statement explains how the current fiscal policies are in conformity with sound fiscal management principles and gives the rationale for any major deviation in key fiscal measures.
Ahead of the Union budget on July 23, the All India Federation of Tax Practitioners (AIFTP) has urged the government to significantly reduce personal income tax rates. AIFTP President Narayan Jain passionately advocated for increasing the exemption limit to Rs 5 lakh, aligning with the organization’s goal to lessen the tax burden on citizens. Read more.
The Macro-economic Framework Statement, presented under Section 3 of the FRBM Act, 2003 and its associated rules, provides a comprehensive evaluation of the economy‘s growth prospects. It includes specific underlying assumptions, assessments of GDP growth, the domestic economy’s stability, and the external sector’s resilience. Additionally, the statement covers the fiscal balance of the Central Government and the overall external sector balance of the economy.
Alongside the Annual Financial Statement, the Finance Bill is presented to Parliament, fulfilling the mandate of Article 110(1)(a) of the Constitution. This bill details proposed taxes—imposition, abolition, remission, alteration, or regulation—outlined in the Budget. Additionally, it includes other provisions related to the Budget, classified under Money Bill status as per Article 110 of the Constitution.
During the upcoming Budget session, the government plans to introduce a bill amending the Insurance Act, 1938, with the aim of achieving ‘Insurance for All by 2047’. Proposed provisions may include introducing composite licenses, differential capital requirements, reducing solvency norms, permitting captive licenses, revising investment regulations, implementing one-time registration for intermediaries, and enabling insurers to distribute additional financial products, according to sources familiar with the matter, reported PTI.
Demands for Grants, mandated by Article 113 of the Constitution, are detailed requests for expenditure from India‘s Consolidated Fund, presented annually alongside the Annual Financial Statement to the Lok Sabha. Typically, each Ministry or Department submits one or more demands, with separate demands for Union Territories. For the Budget 2024-25, there are 102 Demands for Grants.
Each demand breaks down ‘voted’ and ‘charged’ expenditures, distinguishing between ‘revenue’ (day-to-day expenses) and ‘capital’ (asset creation) expenditures. It begins with a summary and outlines major expenditure categories, including any recoveries. Details of new services or instruments introduced are also included.
Expenditures solely charged to the Consolidated Fund, like Interest Payments, are presented separately as Appropriations and do not require parliamentary voting. Demands for Grants ensure parliamentary oversight and approval, enhancing transparency and accountability in government financial management.
The Annual Financial Statement (AFS), mandated by Article 112 of the Indian Constitution, outlines the estimated receipts and expenditures of the Government of India for the fiscal year. Presented in three parts—the Consolidated Fund of India, the Contingency Fund of India, and the Public Account of India—the AFS distinguishes revenue expenditures from capital expenditures.
The Consolidated Fund of India (CFI) encompasses all government revenues, loans, and recoveries, from which all expenditures are drawn with parliamentary authorization. The Contingency Fund of India, authorized by Article 267, serves for urgent unforeseen expenses pending parliamentary approval, replenished from the CFI post-facto. The Public Account holds funds in trust, including those for specific purposes like provident funds and small savings, not requiring parliamentary approval for withdrawals but for which expenditures must eventually be authorized.
The Revenue Budget covers revenue receipts (tax and non-tax revenues) and expenditures for routine government operations and services. In contrast, the Capital Budget includes receipts from loans and disinvestments used for capital expenditures like infrastructure development and asset acquisition. The AFS provides a comprehensive financial plan reflecting government fiscal policies and expenditures across these categories, crucial for transparency and accountability in fiscal management.
The list of Budget documents presented to the Parliament, besides the Finance Minister’s Budget Speech, is given below:
A. Annual Financial Statement (AFS)
B. Demands for Grants (DG)
C. Finance Bill
D. Fiscal Policy Statements mandated under Fiscal Responsibility and Budget Management (FRBM) Act, 2003:
i. Macro-Economic Framework Statement
ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement E. Expenditure Budget
F. Receipt Budget
G. Expenditure Profile
H. Budget at a Glance
I. Key Features of Budget 2024-25
J. Implementation of Budget Announcements, 2023-24
Mudhit Gupta, Founder & CMD, EMGEE Group, says, “The Indian real estate sector has undergone significant evolution over the past few decades. There is robust demand expected in the coming years, particularly for sectors like data centres and luxury housing. The real estate sector is forecast to grow at a CAGR of 9.2% from 2023 to 2028, presenting attractive opportunities. Major private investors like Blackstone are seeking to invest an additional $22 billion in Indian real estate by 2030.
The Indian government has been supportive, allowing 100% FDI in townships and settlement development projects. Foreign investors are pumping around $4 billion yearly into Indian real estate. The new framework for Small and Medium REITs is expected to further enhance fund flows into the sector. The real estate sector in India has high hopes for the Union Budget 2024-25, as it looks to the government for policy reforms and incentives that can bolster the industry‘s growth and address the evolving needs of homebuyers, developers, and investors and could significantly impact the real estate landscape in the coming years.”
In India, the “Budget at a Glance” document provides a concise overview of the Union Budget presented annually by the government. It is typically released alongside the full budget document and serves as a summary that highlights key aspects such as:
-Revenue and Expenditure: Breakdown of government revenue sources (like taxes, non-tax revenue) and expenditure (planned allocations across sectors).
-Fiscal Deficit: The gap between government spending and revenue, indicating borrowing needs.
-Sectoral Allocations: Allocation of funds to key sectors like agriculture, infrastructure, health, education, etc.
-Economic Indicators: Key economic forecasts such as GDP growth, inflation targets, and fiscal policy measures.
-Tax Proposals: Summary of changes in tax rates, policies, and exemptions.
-This document is crucial for stakeholders to quickly grasp the budget’s priorities and impacts on various sectors of the economy.
An interim budget and a vote on account are distinct in their purpose and scope. An interim budget is presented by the government when general elections are imminent or the term of the current government is ending soon. It typically covers the estimated government expenditure for a short period until a new budget is presented by the incoming government. In contrast, a vote on account is a provision made by the Parliament/legislature to allow the government to withdraw funds from the Consolidated Fund of India for a limited period, usually a few months, to meet essential expenses such as salaries and ongoing government programs, pending the full budget approval.
The expectations regarding income tax in the Union Budget typically revolve around several key areas:
These expectations vary each year based on prevailing economic conditions, fiscal goals of the government, and broader policy priorities.
Foreign investors pumped Rs 15,352 crore into Indian equities in the first half of this month, spurred by the government’s ongoing reforms, low US Federal rates, and robust domestic demand.
Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment Research India, emphasized that the upcoming Union Budget would be closely watched by foreign investors. They seek insights into the government’s strategies for economic growth.
The Union Budget for 2024 is eagerly anticipated, scheduled to be presented by Finance Minister Nirmala Sitharaman on July 23. The Budget will be presented at 11 AM. This crucial annual event outlines the government’s financial plans and priorities for the upcoming fiscal year. It is a pivotal moment for various sectors and stakeholders, as they await policies that could influence economic growth, taxation, infrastructure development, and social welfare.
The Budget presentation typically includes key announcements on expenditures, revenue generation measures, fiscal deficit targets, and sector-specific allocations. It serves as a barometer for economic sentiment and often sets the tone for the country’s economic trajectory in the coming year.
Santush Kumar Pandde, COO, Real Estate, Grauer and Weil (India) Limited) says, “As we approach the union budget, we have high expectations for policies that will stimulate consumer spending and drive growth in the retail sector. Recognizing the immense potential of this sector, the government should revamp FDI policies to make them more appealing to investors and remove regulatory obstacles that have impeded foreign investment.
Additionally, incentives for digital transformation and sustainability efforts would greatly benefit shopping malls. The new government should prioritize improving basic amenities, such as effective mode of transportation and easy access. To address high costs and reduce carbon footprints, the government can provide rebates for green supply chain logistics, incentives for sustainable infrastructure development, and subsidies for special warehousing zones. Additionally, boosting semiconductor manufacturing in India can enhance every sector of retail.”