The Chartered Accountant | Theme August 2024 • Pages 44–50

Budget 2024-25: A Blueprint for Inclusive Growth and Economic Stability

Dr. Rajeev Kumar

Academician

Finance Minister Nirmala Sitharaman, under the leadership of Prime Minister Narendra Modi, unveiled an ambitious Union Budget for fiscal year 2024-25. Anchored in the vision of inclusive growth, employment generation, and sector-specific development across agriculture, manufacturing, and infrastructure, the budget addresses the aspirations of a diverse populace across regions, genders, and age groups.

1. Economic Context & Growth Indicators

India continues to demonstrate robust resilience despite global economic uncertainties. The National Statistical Office (NSO) revised real economic growth projections for FY24 upward from 7.3 percent to 8.2 percent.

8.2%

Revised Real GDP Growth Projection for FY24 (NSO)

₹295.36 Lakh Cr

Estimated Nominal GDP ($3.53 Trillion) for FY24

10.2%

Projected Nominal GDP Growth for FY25

3.1%

Core Inflation Rate, aligning with the 4% target

2. Budget Receipts & Expenditure Summary

The FY 2024-25 Union Budget presented four sets of financial estimates: Actuals for 2022-23, Revised Estimates for 2023-24, Provisional Actuals for 2023-24, and Budget Estimates for 2024-25.

Sources of Receipts (% of Total Receipts)

Borrowings & Other Liabilities: 27% (a sharp 6% reduction relative to FY 2023-24 provisional actuals)
Income Tax: 19% (highest contributor among tax revenues)
Goods & Services Tax (GST): 18%
Corporation Tax: 17%
Non-tax Receipts: 9%
Union Excise Duty: 5%
Customs Duty: 4%
Non-debt Capital Receipts: 1%

Major Expenditure Allocations (% of Total Expenditure)

States' Share of Taxes & Duties: 21% (increased by 3%)
Interest Payments: 19%
Central Sector Schemes (excl. Defence Capex & Subsidies): 16% (increased by 1%)
Finance Commission & Other Transfers: 9%
Centrally Sponsored Schemes: 8% (increased by 1%)
Defence: 8%
Economic Subsidies: 6% (reduced by 1%)
Pension: 4%

3. Nine Key Priority Areas

1. Productivity & Resilience in Agriculture

Allocated ₹1.52 lakh crore to release high-yielding, climate-resilient crop varieties, promote natural farming, achieve self-sufficiency in pulses/oilseeds, and deploy digital public infrastructure.

2. Employment & Skilling

Introduced Employment Linked Incentives (ELI) to incentivize hiring in manufacturing. The Prime Minister's skilling package aims to train 20 lakh youth over 5 years through a new centrally sponsored scheme.

3. Inclusive Human Resource Development & Social Justice

Focuses on marginalized groups and regional initiatives like Purvodaya for eastern states. Includes ₹26,000 crore for connectivity and ₹21,400 crore for power projects in Bihar, alongside a new airport. Continues PM Garib Kalyan Ann Yojna for 80 crore people and allocates ₹2.66 lakh crore for rural infrastructure under PM Awas Yojna.

4. Manufacturing, MSMEs & Services

Enhanced credit access via public sector banks and expanded Mudra loan limits. Introduced E-Commerce Export Hubs for artisans and an internship scheme for 1 crore youth in 500 top companies with a monthly stipend of ₹5,000 and ₹6,000 one-time assistance from CSR funds.

5. Urban Development

Initiatives include developing growth hubs, transit-oriented development, creative urban redevelopment, and launching PM Awas Yojana Urban 2.0.

6. Energy Security

Reiterated commitment to 1 crore solar rooftops under PM Surya Ghar Yojna and support for nuclear energy and advanced ultra-supercritical thermal power plants.

7. Infrastructure & Tourism

Maintained capital expenditure support of ₹11.11 lakh crore (3.4% of GDP). PMGSY Phase 4 will provide all-weather road connectivity to 25,000 rural habitations. Flood control assistance provided for Bihar, Assam, HP, Uttarakhand, and Sikkim, alongside spiritual/ecotourism development in Bihar and Odisha.

8. Innovation, Research & Development

Operationalization of the Anusandhan National Research Fund to boost private sector-led commercial R&D, alongside a vision to expand the space economy fivefold over 10 years.

9. Next Generation Reforms

Land reforms including Unique Land Parcel Identification Number (ULPIN), GIS mapping, and digital land registries. Labor reforms integrating e-Shram with revamped Shram Suvidha and Samadhan portals.

4. Fiscal Overview & Deficits

Fiscal Discipline Targets (% of GDP):

Fiscal Deficit Target (FY25 BE): 4.9% (reduced from 5.6% PA in FY24)
Revenue Deficit Target (FY25 BE): 1.8% (down from 2.6% PA in FY24)
Primary Deficit Target (FY25 BE): 0.6% (down from 1.6% PA in FY24)

5. Key Tax Proposals

Personal Income Tax

Increased the standard deduction from ₹50,000 to ₹75,000 for salaried employees and from ₹15,000 to ₹25,000 for family pensioners, benefiting around 4 crore taxpayers. Proposed a comprehensive review of the Income Tax Act, 1961, to reduce litigation and compliance costs.

Capital Gains & Securities Transaction Tax (STT)

Short-Term Capital Gains (STCG): Increased from 15% to 20% on specified financial assets.
Long-Term Capital Gains (LTCG): Increased from 10% to 12.5%, with exemption limit raised from ₹1 lakh to ₹1.25 lakh.
STT on Derivatives: Increased to 0.02% on futures and 0.1% on options.

Indirect Taxes & Customs Duties

Reduced basic customs duties on gold, precious metals, mobile phones, marine products, and solar equipment. Critical minerals including Lithium, Copper, Cobalt, and rare earth elements are fully exempted from customs duty to encourage domestic battery production.

References

1. Chelliah, R. J. (1991). Report of the Tax Reform Committee, Govt. of India.

2. Musgrave, R. A. & Musgrave, P. B. (1989). Public Finance in Theory and Practice (5th ed.), McGraw-Hill.

3. Rangarajan, C. & Srivastava, D.K. (2005). Fiscal Deficits and Government Debt: Implications for Growth and Stabilisation, EPW.

4. Govt. of India (2024). Union Budget Documents & Economic Survey 2023-24, Ministry of Finance.