India’s final budget compared to the Interim Budget

Source: The post India’s final budget compared to the Interim Budget has been created, based on the article “Budget 2024: A clear goal, with hazy roadmap” published in “Indian Express” on 30th July 2024

UPSC Syllabus Topic: GS Paper 3- Economy-Government Budgeting.

Context: The article discusses the differences between India’s Interim and Final Budgets, focusing on revenues and expenditures. It highlights minor changes in expenditures and significant revenue changes due to higher RBI dividends. The article also critiques the implementation of budget plans and the effectiveness of new fiscal policies.

For detailed information on Union Budget 2024-25 Key Highlights read this article here

How Does the Final Budget Compare to the Interim Budget?

1. Expenditures: Marginal increase with an additional Rs 54,744 crore allocated to revenue expenditures.
2. Capital Expenditures: Remains unchanged at Rs 11.11 lakh crore.
3. Tax Devolution: Increased by Rs 27,428 crore.
4. Net Tax Revenues: Stands at Rs 25.83 lakh crore.
5. Non-Tax Revenues: Estimated at Rs 5.46 lakh crore.
6. Total Net Revenue Receipts: Amounts to Rs 31.29 lakh crore.
7. The expenditure ratio: It is 77:23 between revenue and capital.
8. Fiscal Deficit: Reduced to 4.9% of GDP from 5.1%.
9. Revenue Receipts: Increased by Rs 1.27 lakh crore due to higher RBI dividends.
10. Non-Defence Capital Outlay: Reduced by nearly Rs 21,000 crore.
11. Interest-Free Loan to States: Provisioned at Rs 1.5 lakh crore with limited offtake.

What Measures Are Introduced in the Budget?

1. Review of Income Tax Act 1961: A comprehensive review is planned within six months.
2. Capital Gains Tax: Rationalization and rate increases, particularly for real estate assets, are proposed.
3. Angel Tax Removal: This will encourage venture capital investments in startups.
4. Interest-Free Loan to States: Rs 1.5 lakh crore provision continues from the COVID-19 pandemic year, aimed at capital spending, though utilization has been limited.
5. Employment Linked Incentives: New initiative with three components to create desirable, long-term employment, despite uncertainties about its lasting impact.

What About Employment and Technology Impact?

1. Employment Linked Incentives: A new initiative with three components aims to create formal, stable, and long-term employment. The success depends on imparting training and experience to workers.
2. Technology Impact: New technologies like AI and Gen AI could lower employment elasticity. Higher employment will need higher growth due to lower people absorption per unit of output.

What Are the Concerns and Recommendations?

1. Performance Budgeting: Ensuring actual expenditures match planned ones is crucial. Monitoring the success of past schemes, like self-sufficiency in oilseeds, is important.
2. Fiscal Consolidation: Continuing fiscal consolidation is necessary. Aiming for a 3% GDP fiscal deficit is essential for improving private investment and reducing government draw on financial savings.

3.Implementation Effectiveness: The success of the Budget depends on effective project implementation, particularly with its emphasis on expenditures.

Question for practice:

Examine the measures introduced in the Union Budget 2024-25 and their potential impact on employment and technology.