Key Highlights of Interim Budget 2024

India’s economy received its budget today as FM Nirmala Sitharaman introduced the Budget for 2024, the BJP government’s final budget before the general elections of 2024. However, this was not a regular Union Budget, it was an Interim Budget.

What is an Interim Budget?

Unlike a Regular Union Budget, which presents an economic and financial roadmap for India for an entire financial year, an Interim Budget is a temporary financial plan for the time when a country is going through a transition period.

A transition period is when a government is going out due to the start of Lok Sabha elections that will determine which political party will come into power. It is a provisional budget that allocates funds only for essential government operations and urgent requirements.

Top Highlights of Interim Budget 2024: -

• Environment Sustainability

  • Viability gap funding for wind energy projects.
  • A phased mandatory blending of PNG, CNG, and Compressed Biogas.
  • Financial assistance for procurement of Biomass aggregation machinery.
  • Setting up solar panels on 1 crore households to give them 300 units of free electricity per month, resulting in annual savings of Rs 15,000-18,000 per household.
  • Setting up of coal gasification and liquefaction capacity 
  • Adoption of e-buses for public transport network.
  • Boosting the EV ecosystem by supporting manufacturing and charging.
  • Launch of a new scheme of biomanufacturing and bio-foundry to support environment-friendly alternatives 

• Tourism

  • States will be encouraged to develop iconic tourist centres to attract business and promote opportunities for local entrepreneurship by way of long-term interest-free loans.
  • Projects for port connectivity, tourism infrastructure, and amenities will be taken up in islands, including Lakshadweep.

• Housing

  • Housing for middle-class scheme to be launched to encourage middle-class families to buy/build their own homes.

• Tax

  • Tax benefits to startups and investments made by sovereign wealth funds/pension funds
  • Tax exemption of some IFSC units extended by 1 year. 
  • Outstanding direct tax demands up to ₹25,000 pertaining up to FY10 & up to ₹10,000 for FY11-15 are withdrawn. This move is expected to benefit almost 1 crore taxpayers!

• Infrastructure

  • Implementation of 3 major railway corridor programmes under PM Gati Shakti to improve logistics efficiency and reduce cost 
  • The promotion of foreign investment via bilateral investment treaties is set to be negotiated. 
  • Expansion of existing airports and comprehensive development of new airports under the UDAN scheme. 
  • Promotion of urban transformation via Metro Rail and NaMo Bharat.
  • The upgradation of 40,000 railway bogeys into Vande Bharat bogeys for a better experience.

• Agriculture

  • The government will promote private and public investment in post-harvest activities 
  • Application of Nano-DAP to be expanded in all agro-climatic zones. 
  • Atmanirbhar Oilseeds Abhiyaan-Strategy to be formulated to achieve self-reliance for oilseeds
  • Measures to boost dairy production. 
  • Implementation of Pradhan Mantri Matsaya Sampada Yojana to be stepped up to enhance aquaculture productivity and double exports.

• Others

  • Increase in capital spending for 2024-25 by 11.1% to Rs 11.11 lakh crores.
  • Set up a Rs 1 lakh crore corpus with 50-year interest-free loans to ramp up investment in sunrise sectors.
  • Set up an Aspirational District Programme (ADP) to assist States in faster development, including employment generation.
  • Estimated fiscal deficit for 2024-25 is 70bps lower at 5.1% of GDP.
  • The ultimate goal is to make India a developed economy by 2047.

• Ministry-wise fund allocation: -

Impact on the Stock Market

The stock markets saw a fairly volatile session today. The initial movement was positive as the Nifty 50 index jumped up to 21,825 but once the Finance Minister began announcing the Budget in the parliament, markets tumbled and tested its immediate support at 21,720 before recovering. Considering global market weakness due to a (potential) postponement of interest rate cuts, investors anticipated a weak market today. Although the Bulls tried to put up a fight, the Bears were stronger.

The range-bound market wiped out all initial gains and ended with the Bears’ victory as the index closed below its support at 21,698, down 13 bps. Automobile, Insurance, and Pharmaceutical stocks like Maruti Suzuki, Eicher Motors, SBI Life Insurance, HDFC Life Insurance, and Cipla helped drive the index up while IT, Realty, and Telecom stocks like Bharti Airtel, Ultratech, Grasim, LTIMindtree, and Tech Mahindra drove the index down. 

Check out the full speech by Finance Minister Nirmala Sitharaman here.