Budget 2024 Date Highlights: When will Finance Minister Nirmala Sitharaman announce Union Budget 2024?

The longest budget speech in terms of duration in India’s history. was presented by Finance Minister Nirmla Sitharaman. Her budget speech in 2020 was two hours and 42 minutes long. That year on February 1, 2020, her speech began at 11 am and continued till 1:40 pm. She was not even able to complete the budget speech script as she was unwell. Later, the speech was completed by Om Birla.

In terms of word count, the longest speech was given by former Prime Minister Manmohan Singh in 1991. Former PM Manmohan Singh’s speech as Finance Minister had 18,650 words.

The first interim budget of India was presented in 1860 by James Wilson, a Scottish economist who used to work with the East India Company.

Nearly two decades ago, interim budgets were limited to routine announcements where the present government used to stay away from announcing major schemes or rate cuts. However, from 2004-5, interim budgets started consisting of announcements related to tax cuts, extension of schemes, and subsidies.

India’s first interim budget was presented by RK Shanmukham Chetty in 1947. The budget was presented after India’s independence to address the country’s economic hardship including food grain shortage, elevated imports, and skyrocketing inflation.

Till now fourteen interim budgets have been presented since India’s independence. The last one was presented by former Finance Minister Piyush Goyal in February 2019. Goyal’s speech for the presentation of the interim budget consisted of 8,119 words and was the second-longest interim budget speech after the one presented by RK Shanmukham Chetty in 1947.

Until 1999, the Union Budget was presented at 5 pm on the final day of February. This practice, inherited from British India, remained unchanged even after Independence. The timing of the presentation during the colonial era was determined by Britain’s local time. In that period, the Budget was presented in Britain at 11 am (local time), which corresponded to 5 pm in India.

Later in 1999, Yashwant Sinha, who was the Finance Minister in the Atal Bihari Vajpayee-led NDA government, proposed that the Union Budget should be presented at 11 am. 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. He became the first FM to present the Union Budget at 11 am in the history of independent India.

Arun Jaitley, the former Union Finance Minister, in 2017, also abolished the tradition of presenting a separate Budget for Railways, which had been practiced during British rule. The FM announced that the Railways Budget would be integrated with the Union Budget.

A few years ago, the budget used to be presented at the end of February.

In 2017, Arun Jaitley, former Union Finance Minister, declared that the Union Budget would no longer be presented on the final working day of February, as was the practice during the colonial period. This tradition originated in the 1860s when officials of the East India Company introduced it in India.

Former FM Jaitely initially stated that the budget would be presented on February 1 instead of the last day of the month to end the 92-year-old practice.

He also mentioned that as the Budget is presented at the end of February, the government had very little time to prepare for the new policies and changes that would take effect from April 1. Therefore, the date of the Budget presentation was moved to February 1.

The Interim Budget refrained from making any extravagant populist declarations. The standout feature was its adherence to fiscal discipline, exemplified by the decision to cap the fiscal deficit for FY2024-25 at 5.1%. Notably, the central government’s decision to enhance capital expenditure to a robust and enigmatic number of Rs 11,11 trillion lays the foundation for a long-term economic growth.

While the government can choose to not present an interim budget and just get the funds required for spending via the ‘vote on account’ route, but as per convention, the governments usually opt for an interim budget in the election year.

It is the total amount, including liabilities, borrowed by the Union and state governments. The debt, serviced out of the CFI in the Centre’s case, includes a large internal component and a much smaller external debt. While a government-appointed panel had pitched for a debt-to-GDP ratio of 60% (40% for Centre and 20% for states) by FY23,the ratio peaked at 89% in FY21 and was at 83.4% in FY22.

Goods & Services Tax (GST) collections during the month of May 2024 came in at Rs 1.73 lakh crore, recording a growth of 10 per cent on-year, according to the latest data released by the Ministry of Finance on Saturday. For the previous month (April), GST collection had breached the Rs 2 lakh crore milestone. The gross GST collection during April had hit a record of Rs 2.10 lakh crore, up 12.4 per cent on-year.

The Ministry of Finance further added that the growth was driven by a strong increase in domestic transactions (up 15.3 per cent) and slowing of imports (down 4.3 per cent). After accounting for refunds, the net GST revenue for May 2024 stood at Rs 1.44 lakh crore, reflecting a growth of 6.9 per cent as compared to the same period last year.

On April 21, the tax department announced that India’s net direct tax collections increased by 17.7% year over year to Rs 19.58 crore in the fiscal year that ended in March 2024, much above even revised projections. In FY24, net collections of income and corporation taxes, which account for the majority of direct taxes, surpassed the revised estimates by Rs 13,000 crore and budget estimates by Rs 1.35 lakh crore, or 7.40%.

In the interim Budget released on February 1, the government increased the target for direct tax collection in FY24 (April 2023 to March 2024) to Rs 19.45 lakh crore. With this, the gross tax collection target as per the revised estimate stood at Rs 34.37 lakh crore for FY24.

Revenue collected from taxes imposed on income and profits (direct taxes) and those levied on consumption of goods and services/transactions (indirect taxes). This is the main source of the government’s revenue. Tax is an involuntary fee levied on individuals and firms by the government in order to finance its activities. In principle, these are quid pro quo in nature.

Gross Tax Receipts includes all taxes collected net of refunds, while Net Tax Receipts (NTR) are the actual inflows into the Budget after mandatory devolution of certain part of revenues from the divisible tax pool to states. Proceeds of cesses (imposts linked to specific purpose) and surcharges (additional charges on taxes) are not shareable with states and go straight into NTR.

CAD measures the difference between a country’s total exports and its total imports of goods, services, and transfers over a specific period. In simpler terms, it reflects the trade imbalance between a country and the rest of the world.

Say for instance, suppose India exports goods and services worth Rs 800 billion but imports goods and services worth Rs 1 trillion. The difference, Rs 200 billion, represents India’s CAD. This means India is spending more on importing goods and services than it is earning from exporting them.

The Union government’s fiscal deficit for the last financial year came in at 5.6% of the Gross Domestic Product (GDP), lower than the revised estimate (RE) of 5.8%, on the back of better than anticipated revenues and some expenditure compression. The budget estimate (BE) for the deficit in FY24 was 5.9%. In absolute terms, the deficit stood at Rs 16.5 trillion as against the RE of Rs 17.3 trillion and BE of Rs 17.8 trillion, according to data released by the Controller General of Accounts..

Usually referred to as fiscal deficit, it is the difference between the government’s total expenditure and its total non-borrowed receipts. To elaborate, this is the difference between the total expenditure by way of revenue, capital and loans net of repayments, and revenue receipts and capital receipts which are not in the nature of borrowings but which accrue to the government, on the other.

Incurred for the running of government departments and various services (administrative expenses, payments of salaries/ pension, etc.), interest payments on debt, subsidies, etc. These don’t result in creation of assets.

Revenue receipts include (mostly) tax revenues but also non-tax revenues. The latter consists of interest and dividend on investments made by the government and fees and other receipts for services rendered by the government (for example, licence fees from telecom companies for spectrum).

Includes market borrowings and other loans but also non-debt receipts like proceeds of disinvestment/sale of government assets, including incorporated companies and recovery of loans. The receipts cause a decrease in the government’s assets.

The Union Budget comprises Revenue and Capital Budgets. Revenue Budget does not alter the government’s assets and liabilities whereas the Capital Budget does. Capital receipts and capital payments (expenditure) make Capital Budget and revenue receipts and revenue expenditure constitute Revenue Budget.

An interim budget is presented by a government that is going through a transition period or is in its last year in office before the general elections held every 5 years. An incumbent government cannot present a full Union Budget in the election year and instead, the finance minister presents an interim budget during the joint sitting of Rajya Sabha and Lok Sabha in Parliament.

The interim budget contains detailed documentation of all the expenses to be incurred and every rupee to be earned through taxes in the coming few months until the elections. With this budget, the incumbent government seeks a vote of approval from Parliament to extract money from the consolidated fund of India, where the government puts all its revenue, to meet its budget expenses before the end of the financial year. The interim budget, besides a full estimate of the revenue and expenditure, also consist of some policy measures.

When the Narendra Modi government first came to power in 2014, Arun Jaitley was appointed as the finance minister from the Bharatiya Janata Party (BJP). Jaitley’s maiden budget for the Modi government was presented on 10 July 2014, almost two months after the Modi government was sworn in in May 2014, replacing the previous UPA government, which had P Chidambaram as the finance minister.

On June 7, the Reserve Bank of India retained the inflation forecast for FY25 at 4.5 percent as CPI headline inflation softened further in March-April but food prices remained high.

The RBI’s six-member monetary policy committee (MPC) expects inflation at 4.9 percent in the first quarter, 3.8 percent in the second, 4.6 percent in the third and 4.5 percent in the final quarter of the current financial year.

Garima Kapoor, Senior Vice President, Economist, Elara Securities retained the FY25 growth projection at 7% and explained that “The announcement of final Budget in July 2024 by the new government with the announcements of 100-day plan may offer further policy clarity and direction as to next growth levers. The key risk to India’s growth outlook, in our view, comes from potential slowdown in the global economy due to lower-than-expected rate cuts by the central banks and continued geopolitical tensions. A delay in rate cuts in the US and volatile food inflation suggest that India’s rate cut cycle is unlikely to commence before Q4FY25. We expect a 25bps cut in FY25E.”

DD Mishra, VP Analyst, Gartner, said, “So far, we see that India needs to do a lot to tap the next big shift around AI. The next phase of growth in the IT Sector will be AI-led. India did pretty well to leverage the labor arbitrage and by fully exploiting this shift that has been happening for some time, India can well become an AI Hub that can support skills, capabilities, competencies, and innovation in this space. India’s unique position in the IT space may come under a lot of threat from some of the emerging destinations of AI and hence the Government should immediately focus on enabling growth and investment by forming policies that can accelerate the growth of AI. Nearly 7-8% of our GDP depends on the IT and ITeS sector which may potentially need to be protected. The next phase of economic growth will be led by AI, and this should get more importance in the policies.”

Earlier on June 7, the Reserve Bank of India Monetary Policy Committee held its second bi-monthly monetary policy of FY25. The RBI raised its GDP growth forecast for FY25 to 7.2 per cent from 7 per cent earlier. The central bank retained the FY25 inflation forecast at 4.5 per cent.

Q1FY25 GDP growth forecast increased to 7.3% from 7.1%

Q2FY25 GDP growth forecast increased to 7.2% from 6.9%

Q3FY25 GDP growth forecast increased to 7.3% from 7%

Q4FY25 GDP growth forecast increased to 7.2% from 7%

As Nirmala Sitharaman takes on her renewed role, her immediate focus will be on sustaining economic growth and encouraging private sector investment. Her 100-day agenda, per industry leaders and economists, will likely address several critical areas like rural distress, employment generation, and the rationalisation of GST and income tax rates. Additionally, measures to curb inflation are expected to be a significant part of the finance minister’s agenda.

Earlier in May, the Reserve Bank of India approved a dividend of Rs 2.11 lakh crore for the Central government for FY24, marking a significant increase of around 141% compared to FY23. Additionally, the contingency risk buffer (CRB) has been raised to 6.5% from its previous level of 6%. In FY23, the central bank had transferred Rs 87,416 crore to the Centre as surplus.

Vinod Nair, Head of Research, Geojit Financial Services, said, “A key area of focus will be to generate jobs, especially in the rural economy. Consequently, the final budget is anticipated to feature increased government expenditure in areas such as MGNREGA, housing, water, and agriculture. Simultaneously, the government will maintain its pro-industrial policy to encourage private investments. Labor-intensive sectors such as agriculture, cattle, textiles, leather, marine products, and construction can anticipate supportive schemes. Initiatives to promote affordable housing will benefit sectors including cement, construction-related industries, banks, and housing finance NBFCs. Tourism will see further impetus to increase job opportunities. Hotels and leisure industries can do well. Policy continuity is expected in manufacturing, capital goods, and renewable energy sectors. Additionally, affordable healthcare is likely to remain a priority. To support private investment, it is expected that PLI schemes will be expanded and include additional sectors, particularly those that are labour-intensive. Better schemes for small farmers and the creation of jobs are likely to be upright for the rural economy.”

“A key area of focus will be to generate jobs, especially in the rural economy. Consequently, the final budget is anticipated to feature increased government expenditure in areas such as MGNREGA, housing, water, and agriculture. Simultaneously, the government will maintain its pro-industrial policy to encourage private investments.

Labor-intensive sectors such as agriculture, cattle, textiles, leather, marine products, and construction can anticipate supportive schemes. Initiatives to promote affordable housing will benefit sectors including cement, construction-related industries, banks, and housing finance NBFCs. Tourism will see further impetus to increase job opportunities. Hotels and leisure industries can do well. Policy continuity is expected in manufacturing, capital goods, and renewable energy sectors. Additionally, affordable healthcare is likely to remain a priority.

To support private investment, it is expected that PLI schemes will be expanded and include additional sectors, particularly those that are labour-intensive. With youth employment being a critical need, significant government capex and increased funding for MSMEs and startups are anticipated.

Better schemes for small farmers and the creation of jobs are likely to be upright for the rural economy. Increasing the MSP or providing price guarantees, along with removing export bans on agricultural products such as onions, wheat, and sugar, will be advantageous. In the near term, agricultural productivity may decline due to the heat wave in the north, necessitating government support. However, an uplift in monsoons & heatwaves is forecast in FY25 compared to below normal in FY24, which will lead to a reversal in fortunes.”