National Democratic Alliance (NDA) won the fierce election battle with 292 seats, bringing the Modi 3.0 government back in full force. Now it’s time for the event of the year that people of all statuses look forward to: The Union Budget Presentation.
Reappointed as the Finance Minister of India, Nirmala Sitharaman is prepping the red briefcase as we speak. Like a pandora’s box, the Union Budget could contain changes for multiple sectors and tax slabs. The union budget is scheduled for presentation by the third week of July, although a date hasn’t been finalised yet.
So, what could be the target of the Finance Ministry for FY25?
Let’s unravel certain possibilities based on the government's hints, ministers’ speculations, news platforms’ predictions and citizens’ expectations.
2024 already saw the presentation of an Interim Budget early in February. As FinMin Sitharaman warned, not much of the agenda was discussed and modified in the interim budget, seeing as it was the last budget of the term. But even then, the Modi government was pretty confident of reforming the house for the third time.
Now that assurance came true, albeit a bit surprisingly, if you take the tough competition the INDIA bloc presented NDA with. Regardless, the first budget for the new term will be presented in a short month and is likely to have multiple announcements. After all, this budget is expected to set the tone for India's economic trajectory in the coming year.
It won't be too far-fetched to say that the union budget for FY25 is going to be a critical document shaping Prime Minister Narendra Modi's new term along with the nation’s fiscal roadmap.
Reports suggest that the upcoming budget will incorporate elements from Modi's 100-day plan, reflecting his administration's immediate priorities. Additionally, an expansion of Production-Linked Incentive (PLI) schemes is anticipated, aimed at sectors that drive significant employment, such as the leather industry.
The agenda is ambitious, focusing on crucial sectors like agriculture, job creation, sustaining capital expenditure (capex) momentum, and boosting revenue growth while maintaining fiscal discipline. Streamlining GST and easing tax compliances are also likely high on the agenda.
Along with this, here are some expectations and predictions we may see in this Union Budget presentation:
In the interim budget 2024-25, the government had estimated dividends from non-financial Central Public Sector Enterprises (CPSEs) at ?48,000 crore for the current fiscal year.
Financial projections indicate a potential increase in Central Public Sector Enterprises (CPSE) dividend estimates by ?5,000 crore to around ?53,000 crore for the current fiscal year. This adjustment reflects updated data since the interim budget, underscoring the government's revenue expectations from public sector enterprises.
Industry bodies like the Confederation of Indian Industry (CII) are advocating for substantial hikes in planned capex spending. This would help in further fueling economic growth. This push aligns with India's aspirations to become the world's third-largest economy by 2030. The call is to increase capex targets significantly, building on the momentum set in previous budgets.
Continued focus on infrastructure development with increased capex spending. Expectations are for significant allocations towards roads, railways, airports, and urban infrastructure to bolster economic growth and connectivity.
Union Minister for Tribal Affairs Jual Oram highlighted a substantial allocation exceeding ?5 trillion for tribal welfare projects in the upcoming budget. This commitment includes initiatives like expanding Eklavya Model Schools and enhancing income through the National Rural Livelihoods Mission.
Looking at tax reforms, there are considerations to increase the standard deduction threshold (currently at ?50,000), particularly under the new tax regime. This move could provide relief to salaried individuals, reflecting ongoing efforts to support the middle class while maintaining fiscal prudence.
The upcoming Union Budget in India is expected to bring forth changes and allocations across several key sectors and areas, reflecting the government's policy priorities and economic goals. Here's the present Budget Profile for FY23-24.
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Here's a breakdown of sectors likely to see announcements and reforms:
Given the ongoing challenges in the agriculture sector, the budget may introduce measures to alleviate farmer distress, enhance rural infrastructure, and improve agricultural productivity.
Policies aimed at boosting job creation, particularly in sectors like manufacturing, services, and new-age industries. This may include incentives for businesses to expand hiring and training programs to enhance skill development.
Focus on providing vocational training and skill development programs aligned with industry needs to bridge the skill gap and improve employability.
Looking in the past few budgets, the central government (Modi's) has focused consistently on increasing capital expenditure for infrastructure. As per experts, this budget also seems likely to focus on boosting the Urban Infrastructure Development Fund (UIDF) under the National Housing Bank. The step would help enhance urban infrastructure in Tier 2 and Tier 3 cities, reflecting strong commitment to large-scale development.
Apart from this, the budget could also contribute a significant amount of funds towards the further development of three major economic railway corridors, part of the PM Gati Shakti initiative aimed at enhancing logistics efficiency. Vande Bharat train fleet could also be expanded along with improvisation for passenger's safety and logistics efficiency.
Tax reform has been in discussion for quite some time now since the last reformation took place in 2020.
Measures to deepen the financial markets, improve liquidity, and enhance investor confidence. This could involve reforms in capital gains tax, securities transaction tax, and other regulatory adjustments.
The health sector wishes for an increase in public expenditure of over 2.5% of the GDP for healthcare infrastructure. The industry seeks incentives like deductions on R&D expenses, research-linked incentives for MNCs, and corporate tax concessions. Expansion in the list of life-saving drugs for GST/import duty exemptions, including all oncology medications, to further improve patient affordability.
Increased allocations towards healthcare, infrastructure, vaccine development, and strengthening healthcare delivery systems in the wake of the COVID-19 pandemic. Enhancements in education infrastructure, digital education initiatives, and skill development programs to equip the workforce for future challenges.
Incentives and policies to promote renewable energy adoption, sustainable practices, and environmental conservation. Expectations include funding for clean energy projects and initiatives to combat climate change.
Continued support for tribal welfare through increased funding for schemes like the Eklavya Model Schools and initiatives under the National Rural Livelihoods Mission.
Investments in digital infrastructure, broadband connectivity, and digital literacy programs to facilitate inclusive growth and digital transformation across sectors.
As anticipation builds around the Union Budget 2024, it becomes evident that the government's priorities are aligned with accelerating economic recovery and addressing sector-specific challenges.
The budget's unveiling will not only set fiscal targets but also signal policy directions crucial for navigating India's economic trajectory under Modi 3.0. Stay tuned as the details unfold next month in Parliament.