Budget 2024 Highlights: When will Finance Minister Nirmala Sitharaman present full Budget for FY25 (2024-2025)

A day after Nirmala Sitharaman formally assumed charge as Union Minister of Finance and Corporate Affairs, the government announced the date of the 53rd GST Council meet, which is scheduled for June 22, 2024, in New Delhi. “The 53rd meeting of the GST Council will be held on 22nd June, 2024 at New Delhi,” the official handle of GST Council on X, stated.

The government ruled out reducing import duty on wheat by stating that there are “sufficient stocks” of the grain to meet the domestic requirement and undertake a market intervention. While stating that the food and consumer affairs ministry is keeping a close watch on market prices of wheat, an official statement said, “in addition, suitable interventions, as warranted, shall be undertaken to ensure that there is no hoarding by unscrupulous elements and the price remains stable”.

The imports of edible oils – palm, soybean and sunflower — declined by 5% to 8.67 million tonne (MT) in the first seven months of the 2023-24 oil year (November-October) compared to the same period last oil year. BV Mehta, executive director, Solvent Extractors’ Association of India (SEA) told FE that the lower imports in the current oil year so far are due to bumper domestic crops of mustard and soybean and rise in the global prices. The total import of edible oil in the current oil year is projected to decline to around 16 MT, from a record 16.47 MT in 2022-23 oil year. As of June 1, India’s edible oil stocks including those at ports and pipelines stood at 2.41 MT, a decline from 2.94 MT reported a year ago.

India’s retail inflation, based on the Consumer Price Index (CPI), 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. Economists also maintained FY2025 average inflation estimate at around 4.4 per cent. Earlier, data released by the National Statistical Office (NSO) showed that CPI inflation fell to a 12-month low of 4.75 per cent in May from 4.83 per cent in April, mainly due to the high base effect and easing food prices.

India’s wholesale price index (WPI)-based inflation accelerated for the third consecutive month to 2.61 percent in May, primarily due to 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.

“Positive rate of inflation in May, 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc,” the Ministry of Commerce & Industry said in a statement.

India’s merchandise exports grew 9.1% on year in May to $38.13 billion, but a sharp 28% rise in imports of petroleum crude and products pushed imports growth to 7.7%, precipitating a trade deficit of $23.78 billion, the highest since October last year, official data showed.

The rise in outward shipments of goods in May was the highest since February (11.9%), and was much above the subdued trend seen most of the recent months, but it was also due to a low base (-10.4%)

Price of pulses, which had been at elevated levels over the last one year, are likely to soften from next month due to imports and prospects of higher kharif crops, Nidhi Khare, secretary, ministry of consumer affairs said. “From July onwards, prices of tur, urad and chana which are at the elevated levels are likely to soften,” Khare said at a briefing. She said that prices of tur, chana and urad dals have been stable in the last six months but at a high level while the prices of moong and masoor dal varieties are comfortable.”

“We are expecting a good monsoon, more than average rainfall. We anticipate the area under pulses to improve significantly. Farmers will put more area under crops considering high market prices. Market sentiments will also improve,” she said.

The government has reduced windfall tax on domestically-produced crude oil to Rs 3,250 per tonne from Rs 5,200, with effect from July 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’. The new rates are effective from June 15, an official notification said. India first imposed windfall profit taxes on July 1, 2022, joining a host of nations that tax supernormal profits of energy companies.

Finance Minister Sitharaman emphasized India‘s impressive growth trajectory in recent years despite global challenges. She expressed optimism about the country’s economic outlook for the coming years.

She called on government departments to vigorously pursue the NDA government’s development agenda, ensuring responsive policymaking to realize the Prime Minister’s vision of a ‘Viksit Bharat’.

Additionally, she reiterated the government’s commitment to the principle of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayas’ (Together with All, Development for All, Trust of All, Efforts of All), seeking the continued support and cooperation of all stakeholders to build a strong and vibrant economy.

While the date for the FY25 Budget remains undecided, it is confirmed that the Finance Minister will carry the Budget document in a traditional red “bahi khata” style pouch. The red color is symbolic, as businessmen traditionally begin the new year with their accounts in a red cloth-covered “bahi khata” for auspiciousness.

Additionally, there is a colonial connection to this tradition. British Budget Chief William E. Gladstone, known for his lengthy speeches, gained popularity in 1860 for carrying his Budget papers in a distinctive red-colored suitcase.

TT Krishnamachari, who followed CD Deshmukh, was a passionate industrialist with a keen interest in taxation. In 1957, he introduced two new taxes—wealth tax and expenditure tax—and urged taxpayers to show patriotic spirit in paying them. As finance minister during 1964-65, Krishnamachari pioneered India‘s first voluntary disclosure of concealed income schemes. Jawaharlal Nehru, while serving as both prime minister and holding the union finance minister portfolio in 1958-59, became the first to present the budget.

Preparation for Union Budget 2024-25 began on Thursday, prompting North Block, home to the finance ministry, to enter a state of ‘quarantine’ until the Budget presentation in July. Earlier, the finance minister had presented an interim budget on February 1.

Sources indicate that the full Budget for FY25 is expected to include a strategic roadmap for the next five years. The Government plans to synchronize policies with the goal of achieving a developed India (Viksit Bharat) by 2047, marking the centenary of the country’s Independence as a significant milestone.

This year’s fiscal planning is distinct due to the occurrence of two Budgets. The first, presented on February 1, adhered to tradition and acted as a vote on account by the current Government before elections. Normally, a comprehensive Budget is introduced after a new Government takes office, anticipated this mid-July. With the re-election of the BJP-led NDA Government, substantial policy changes are unlikely, with expectations of continuity in existing policies prevailing.

The upcoming Budget for 2024 is slated to be presented in Parliament between July 15-21. There are expectations of revisions to existing schemes, focusing on enhancing welfare initiatives and boosting domestic investments. Several schemes may also be extended beyond their current deadlines to sustain ongoing benefits.

The date for Budget presentation is not decided yet. The assumption is there will be more clarity when the Special Parliament Session kick starts. However, in terms of what’s the Budget is going to focus on, most industry experts and veterans believe that focus will be primarily on people-centric inclusive development policies. These include-

1. Substantive development of all forms of infrastructure. This also comprises the Digital Public Infrastructure (DPI).

2. Deepening the tax base via GST and strengthening financial sector in terms of savings, credit and also getting investment back on track

3. The GIFT International Financial Services Centre is set to finalise direct listing norms within a month.

4. Proactive Inflation management and target RBI‘s comfort levels within the 4% mark.

One of the key features of Budget 2024 includes aligning the policies with India‘s overall aim of ‘Viksit Bharat’ by 2047. The vision focuses on prosperous Bharat in harmony with nature, modern infrastructure and opportunities for all. Policies are set to prioritise comprehensive development of all and many of the schemes are expected to be continued beyond the orginally decided timeline.

TT Krishnamachari, following CD Deshmukh as finance minister, was an industrious figure with a keen interest in taxation. In 1957, he introduced two new taxes: a wealth tax and an expenditure tax, urging taxpayers to demonstrate patriotism in paying these levies. During his tenure in 1964-65, Krishnamachari pioneered India‘s first voluntary disclosure of concealed income schemes.

The date of the Budget for FY25 may still not be decided but what’s absolutely certain is that the Finance Minister will be carrying the tablet with the Budget document in a traditional red bahi khata style pouch. In case you are wondering why the red colour, traditionally the businessmen start the new year with a new account keeping book or bahi khata wrapped in an auspicious red colour cloth.

This apart there is a colonial connection too. The British Budget Chief William E Gladstone in 1860 gained a lot of popularity for his long speeches and a red-coloured suitcase in which he carried his Budget papers.

In the budget of 1950-53, the government formally announced the initiation of the Planning Commission. This primary body, headed by the Prime Minister, was entrusted with the responsibility of directing a well-defined program for the country’s development.

The Budget presented on February 1, followed tradition and served as a vote on account by the incumbent Government ahead of elections. Typically, a full Budget is presented once a new Government is sworn in, which is expected to happen in mid-July this year.

The first Budget presentation by Modi 3.0 Cabinet will be the 7th Budget presented by Finance Minister Nirmala Sitharaman in a row. With this she would then surpass Morarji Desai’s record of presenting 6 consecutive Budgets.

The evolution of budget presentation in India has been intriguing, moving from a traditional briefcase to a bahi khata, and now to a digital tablet. In 2019, Finance Minister Nirmala Sitharaman 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.

Subsequently, for the Union Budget 2021-22, Finance Minister Nirmala Sitharaman presented the budget digitally using a tablet.

According to the Article 112 of the Constitution of India, the Union Budget is also referred as the Annual Financial Statement.

According to Elara Capital, policy reforms and new initiatives in the power sector to continue under Modi 3.0. With power demand growing at a 7% CAGR and peak deficit increasing accordingly, the government is likely to prioritise incentivising private sector investments in large-scale battery energy storage systems. Transmission, generation and distribution segments may also see renewed emphasis.

When Narendra Modi government first took office in 2014, Arun Jaitley assumed the role of Finance Minister. Jaitley presented his inaugural budget for the Modi administration on July 10, 2014, almost after two months of the government’s inauguration in May 2014.

Preparation for Union Budget 2024-25 began on Thursday, prompting North Block, home to the finance ministry, to enter a state of ‘quarantine’ until the Budget presentation in July.

It is expected that the first Budget of the Modi 3.0 Cabinet will be presented during the third week of July, most likely from July 15 to July 21. According to industry insiders, the Budget would prioritise large-scale welfare programmes while highlighting policy continuity in several areas. It is also anticipated that current schemes will be extended past their predetermined ends.

“Although in a coalition, the formation of the NDA government at the Centre for the third straight term fanned expectation of a continuation of policy reforms and economic growth,” Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said. (PTI)

The corporate tax rate for existing companies was lowered from 30% to 22% in the interim Budget released on February 1. Furthermore, a special reduced rate of 15% has been introduced specifically for new manufacturing industries.