The Indian fiscal system utilizes interim budgets to bridge the gap between regular budget cycles. While not as comprehensive as a full budget, interim budgets hold significant weight for the economy, government operations, and public sentiment.
What is an Interim Budget?
An interim budget serves as a temporary financial plan, ensuring essential government functions are funded until a new government can present a regular budget. It outlines a provisional framework for ongoing expenses and existing initiatives.
Key Themes of the 2024 Interim Budget:
- Theme: “Viksit Bharat Budget 2024” (Developed India Budget 2024)
- Focus: Addressing social and economic aspirations of various segments: poor (Gareeb), women (Mahila), youth (Yuva), and farmers (Annadata)
- Goal: Continued progress towards a self-reliant India (Atmanirbhar Bharat)
Analyzing the Budget’s Impact:
To understand the full picture, consider these factors:
- Policy Implications: Focus may be on economic growth, job creation, infrastructure development, or social welfare programs. The budget deficit target and revenue deficit goals also provide insight.
- Taxation Changes: Look for alterations in direct tax proposals, including exemptions and benefits, and any changes to GST (Goods and Services Tax).
- Sectoral Allocations: Allocations to sectors like healthcare, education, agriculture, and infrastructure can influence markets and specific stock performances.
Key Takeaways from the 2024 Interim Budget:
- Fiscal Policy: Aims to reduce the fiscal deficit to 5.1% of GDP and limit the revenue deficit to 2% of GDP for 2024-25.
- Taxation:
- Individuals earning less than Rs. 7 lakh may be exempt from income tax under the new tax regime (Section 115BAC).
- Certain tax benefits for startups and investments might be extended.
- Tax exemption for specific International Financial Service Centre (IFSC) units may be extended.
- No changes to GST rates or import duties for 2024-25.
- Sectoral Allocations:
- Healthcare: Cervical cancer vaccination for girls, nationwide immunization management platform (U-WIN), expanded healthcare coverage under Ayushman Bharat.
- Housing: Two crore additional houses under Pradhan Mantri Awas Yojana-Grameen (rural housing scheme), new initiative to aid middle-class homeownership.
- Agriculture: Encouragement for public and private investment in post-harvest activities, wider use of Nano DAP fertilizer, dedicated program for dairy farmers, expansion of PM Matsya Sampada Yojana (fisheries scheme).
Overall Economic Growth Strategy:
The government emphasizes development and inclusive economic growth, aiming to position India as a developed nation by 2047. Four key areas are highlighted:
- Garib (Poor): Focus on poverty alleviation and financial inclusion.
- Mahilayen (Women): Support for women’s entrepreneurship and education.
- Yuva (Youth): Skill development and fostering entrepreneurial aspirations.
- Annadata (Farmers): Direct financial assistance, crop insurance, and other support programs.
Budget’s Impact on Markets:
The Bank Nifty index and PSU bank stocks performed well, while realty and metal stocks saw declines.
Conclusion:
The 2024 Interim Budget lays the groundwork for the upcoming full budget and reflects the government’s priorities for achieving inclusive development and propelling India’s economic growth.
