In her recent vote-on-account speech, Finance Minister Nirmala Sitharaman delivered a mix of positive and optimistic announcements. The interim budget, presented ahead of the 2024 Lok Sabha elections, focused on boosting housing, renewable energy adoption, and tourism. Despite the surge in developmental projects and the launch of flagship Vande Bharat trains, the government fell short of meeting the previous year’s capital expenditure target of ₹10 lakh crore, reaching ₹9.5 lakh crore in Revised Estimates. However, Sitharaman proposed an 11.1% increase, aiming to spend ₹11.11 lakh crore in the upcoming fiscal year.
The fiscal deficit target saw a slight improvement, dropping to 5.8% instead of the anticipated 5.9%, with a further reduction to 5.1% planned for the next fiscal year. Contrary to expectations, the budget avoided major tax overhauls, considering the impending general election.
Here’s a breakdown of the gainers and losers in the 2024 interim Budget:
Winners:
Middle class: The government introduced a housing scheme for those in rented homes, slums, or unauthorized colonies, aligning with the ‘housing for all’ initiative. The Pradhan Mantri Awas Yojana received a 66% increase to ₹79,000 crore for the financial year 2024.
Farmers: Despite the lowest allocation for the Ministry of Agriculture and Farmers’ Welfare, the government aims to promote private and public investments in post-harvest activities. A focus on the use of Nano Urea for sustainable and technology-driven agriculture was emphasized.
Tourism: To boost tourism, interest-free loans will be provided to states. Special attention will be given to Lakshadweep to enhance tourism in the Union Territory.
Losers:
Disinvestment: With a setback in high-ticket stake sales, the government revised its disinvestment target to ₹300 billion by FY 2024, down from the initial ₹510 billion. The target for the following fiscal year is ₹500 billion.
Jewellers: Hopes for a progressive fiscal policy, including reduced customs duties and tax incentives to boost consumer spending, were dashed as the government maintained the high import tax rate of 15%.
Electric vehicles: While the government expressed intentions to expand electric vehicle adoption and strengthen public charging infrastructure, it took a regressive step by cutting the budget for the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme by 44% for FY 2025. No mention was made of a revamped FAME III scheme for FY 2024.
Infrastructure: Despite the goal of becoming a $5 trillion economy by the next three years and $7 trillion by 2030, the 11.1% increase in capex, from ₹10 lakh crore to ₹11.1 lakh crore, was deemed moderate by market experts. They argue for a more substantial increase to address the challenges of “deteriorating infrastructure.”
