2024 Union Budget Summary

The interim Union Budget of 2024 was a document jam-packed with crucial data about the direction India is heading towards  over the next year and beyond. Though the full budget will be presented inJuly after the Lok Sabha elections, the interim budget had a lot of insightful takeaways. Presented by Finance Minister Nirmala Sitharaman in the Lok Sabha, it primarily focussed on fiscal consolidation, infrastructure, agriculture, green growth and the development of railways. Interestingly, no changes were made in the tax rates, causing disappointment among salaried individuals.

The government set a fiscal deficit target of 5.1%, surprising several economists who predicted it to be around 5.3% to 5.4%. It is believed that shrinking the fiscal deficit to 5.1% while raising capital spending and implementing new welfare policies will require higher tax collections and subsidy cuts as well. According to Sitharaman, India stood on track to achieve her goal of 4.5% fiscal deficit in 2025, set in her budget speech in 2021. The fiscal deficit has been steadily decreasing since hitting a record 9.3% in 2020-21.

There were a few cuts in the budget. Food subsidy was reduced by 3.3 percent from this year’s estimated 2.12 trillion rupees to 2.05 trillion rupees. The fertiliser bill declined by 13% to 1.63 trillion rupees from an estimated 1.88 trillion rupees. Despite analysts expecting an increase. The outgo on the Mahatma Gandhi National Rural Employment Guarantee (MGNREGA) Scheme, the largest job guarantee scheme in the country, was unchanged at 860 billion rupees.

The increase in the defence budget also raised eyebrows among the general public. Sitharaman allocated 6.21 lakh crores for the defence industry, an increase of about 4.3% from the previous year. Though it constituted about 13% of the total budget, it was slammed by critics as a ‘meagre amount’, making up less than 2% of the country's total GDP. However, Sitharaman was quick to point out that the defence budget had more than doubled over the past 10 years, from 2.29 lakh crores in 2014-15 till the present budget.

Healthcare schemes were also prominently visible in the budget, with schemes such as Ayushman Bharat, HPV vaccination programmes and the promotion of Biotechnological research and development. However, the allocation for the healthcare sector stood at less than 2% of the budget, a drop from the allocation for the previous year.

Sitharaman also outlined a plan aiming towards net zero emissions in 2070. Sitharaman made several promises regarding climate action, claiming that India would install solar panels on the rooftops of 10 million households and mandate the phased blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and natural gas (PNG) for domestic purposes. She also unveiled plans to launch Blue Economy 2.0, which is focused at promoting climate-resilient activities and sustainable development in coastal areas. Despite several promises regarding environmental conservation, budget estimates for the Ministry of Environment, Forests and Climate Change (MOEFCC) were less than 0.07% of the total budget, criticised as ‘insufficient’ and ‘inadequate’ by climate activists.

With focus on the sports industry ahead of the upcoming Olympics in Paris, the sports industry got a budget increase, receiving 3,442 crores for the upcoming financial year.Grassroots initiatives such as the ‘Khelo India’ programme and the National Sports Development Fund were also prioritised, garnering a significant portion of the industry’s allocation.

The education budget was up to 7% lower than estimates, receiving 1.2 lakh crores. Despite the NEP 2020 recommending allocating 6% of the union budget towards education, that was yet to be fulfilled, with education constituting only about 4% of the union budget. Union Education Minister Dharmendra Pradhan heralded the budget as a huge step towards India’s education goals, claiming that there were plans to inaugurate new IITs and IIMs over the coming year.

A housing scheme for the middle class was also announced by Sitharaman, allowing those living on rent to buy and build their own houses. Additionally, she also said that two crore more houses would be made in rural areas under the Pradhan Mantri Awas Yojana (PMAY) rural housing scheme.

The Space Industry received a nominal hike of 4% from its budget last year, much of which is expected to be spent on pre-launch testing milestones for the lunar exploration (Chandrayaan) and human spaceflight (Gaganyaan) missions.

While the budget is provisional in nature and the full budget is expected to be announced in July post the Lok Sabha elections, it does paint a picture of what is to come. Being Sitharaman's record-equalling sixth budget, it was also her shortest yet- at only 57 minutes. With no huge promises being made to please voters ahead of the general elections, it showcases the confidence of the finance minister in retaining her power. With focus directed towards the four ‘castes’-garib (poor), mahila (women), ‘yuva’ (youth), and annadata (farmers), the budget was seen as a first step towards the government's pursuit of ‘Viksit Bharat.’