Budget 2024 Speech Highlights, Explained: On Fiscal Deficit, no changes to indirect or direct taxes (2024)

From Income Tax being the biggest source of government revenue (after borrowings) to cuts in core schemes, here is all you need to know about the highlights from the Budget presented yesterday.

“For promoting climate resilient activities for blue economy 2.0, a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with integrated and multi-sectoral approach will be launched,” FM Sitharaman said in her speech.

What is the blue economy and why is it important? We explain here.

Finance Minister Nirmala Sitharaman, in her interim Budget speech, mentioned Pradhan Mantri MUDRA Yojana highlighting the momentum for ‘Nari Shakti’ in the financial year. “30 crore MUDRA Yojana loans have been given to women entrepreneurs,” she said.

Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by Prime Minister Narendra Modi in 2015 to provide loans up to Rs 10 lakh to non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. Who disburses loans as part of the scheme? Click here to read.

In herBudgetspeech, Sitharaman said, “Building on the initiative announced in 2022, a strategy will be formulated to achieve ‘atma-nirbharta (self-sufficiency)’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower. This will cover research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance.”

During the Oil Year (November 2022- October 2023), India imported 167.1 lakh tonne of edible oil – which was 16 per cent higher than the preceding year.Read more here.

Last year, Prime Minister Narendra Modi talked about his vision of making India ‘Viksit Bharat’ (meaning developed India) by 2047.

As Sitharaman presented theinterim Budget on Thursday, she said the government’s vision for ‘Viksit Bharat’ is that of “Prosperous Bharat in harmony with nature, with modern infrastructure, and providing opportunities for all citizens and all regions to reach their potential”. Here's what she said.

Finance Minister Nirmala Sitharaman,presenting the interim budget, announced the expansion of the application of Nano DAP on various crops in all agro-climatic zones. “After the successful adoption of Nano Urea, application of Nano DAP, on various crops, will be expanded in all agro-climatic zones,” the Finance Minister said.

What is Nano DAP — and why does the government want to expand its use? We explain here.

While no big announcements are usually made in interim budgets, the previousNarendra Modigovernment, withPiyush Goyal as Finance Minister, bucked the trend and made two big announcements. Firstly, the government announced the inception of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which promised an annual benefit of Rs 6,000 to all farmers owning up to two hectares of land.

The then government also announced a monthly pension of Rs 3,000 for workers above the age of 60 in the unorganised sector under the Pradhan Mantri Shram Yogi Maandhan (PM-SYM).Read more here.

In a significant initiative to incentivise research and development in the private sector, Finance Minister Nirmala Sitharaman on Thursday announced the establishment of a financial corpus of Rs 1 lakh crore that will provide low-cost or zero-interest loans for purposes of research.

In herinterim budgetfor this year, Sitharaman said private companies could avail of interest free loans for up to fifty years through this new mechanism.

“For our tech savvy youth, this will be a golden era. A corpus of rupees one lakh crore will be established with a fifty-year interest free loan facility. The corpus will provide long-term financing or refinancing with long tenures and low or nil interest rates. This will encourage the private sector to scale up research and innovation significantly in sunrise domains. We need to have programmes that combine the powers of our youth and technology,” she said.Read more about the announcement here.

Finance Minister Nirmala Sitharaman announced in her Budget speech that 2 crore more houses will be built under the Pradhan Mantri Awaas Yojana-Gramin (PMAY-G) in the next five years. She said that the government is set to achieve the target of 3 crore houses under this scheme.

The PMAY-G is a flagship central scheme, involving the states, that aims to provide pucca (permanent) houses with a minimum area of 25 sq. meters with basic amenities to people in rural areas, who are homeless or live in kutcha (temporary) and dilapidated houses.

Each beneficiary will get funds up to Rs 1.2 lakh in the plains and from Rs 75,000 to Rs 1.30 lakh in hilly states, difficult areas, and tribal and backward districts under the Integrated Action Plan (IAP). The funds are to be split in a 60:40 ratio between the centre and states, respectively, with the target of constructing 2.95 crore houses by March 2024.

Against the mandated target of 2.95 crore houses, more than 2.94 crore houses have already been sanctioned to the beneficiaries by various states and Union Territories (UT) and construction of 2.50 crore houses has also been completed as of November 29, 2023.

3. Set up more medical colleges by utilising the existing hospital infrastructure under various departments. A committee for this purpose will be set up to examine the issues and make relevant recommendations.Read more on these announcements here.

“Farmers are our ‘annadata’. Every year, under PM-Kisan Samman Yojana, direct financial assistance is provided to 11.8 crore farmers, including marginal and small farmers,” said FM Nirmala Sitharaman in her Budget 2024speech.

However, the Finance Minister has kept the allocation of the PM-Kisan at Rs 60,000 crore for the financial year 2024-25, which is equal to the budgetary allocation and revised estimates for the current year (2023-24). This is in contrast to her last budget when she had cut the allocation of the PM-Kisan by 13 per cent.Read more of this story here.

Here are some of the main takeaways from the Budget 2024-25 documents:

*Muted expectations from nominal GDP growth: For the coming financial year (2024-25), the government expects the nominal GDP to grow by 10.5%.

*Cuts in health and education spending: Health and education budget allocations are typically much lower than what India needs. But the revised estimates show that even those targets have not been met in the current financial year.

*Income tax is now the biggest income generator for the government: The Budget documents suggest that income tax revenues will account for 19% of all government resources in FY25.

For further explanation of these highlights and the other 3 key takeaways, click here to read our explainer.

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Shortly after returning from the Pran Pratishtha ceremony in Ayodhya on January 22, Prime Minister Narendra Modi had announced that the government would push for the installation of rooftop solar systems in over one crore households.

Sitharaman said on February 1 that the new Suryoday Yojana would enable savings between Rs 15,000 and Rs 18,000 every year for every household, through the free solar electricity and from selling the surplus generation to distribution companies. She said it would also help the adoption of electric vehicles by providing charging stations at home.Households have so far accounted for a small proportion, about 20 per cent, of installed rooftop solar capacity in India. A bulk of the current installations have happened in the commercial and industrial sectors. This new programme adds to an ongoing programme for rooftop solarisation that has been running for at least a decade now.

About 40 per cent, or 40 GW, of the government’s initial target of installing 100 GW of solar capacity by 2022 was to come through rooftop solar systems. However, the country is lagging behind these two targets. At the end of last year, total solar installed capacity in the country had reached 73.3 GW, of which grid-connected rooftop solar contributed only about 11 GW.

The political reactions to theBudgetwere largely along expected lines. Political leaders from the ruling NDA alliance have welcomed it, while some Opposition leaders very quickly wrote it off as “disappointing”. “It was one of the shortest speeches on record in the Budget. Not very much came out of it,” Congress MPShashi Tharoor told news agency ANI.

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Theinterim Budget will include estimates of the government’s expenditure, fiscal deficit and overall financial performance for a few months. After opening in the green, markets later faced heavy volatile trends ahead of the presentation of the Budget presentation. The 30-share BSE Sensex climbed 248.4 points to 72,000.51 in early trade after beginning the day on a positive note. The Nifty went up by 62.65 points to 21,788.35. Later, both the benchmark indices turned turbulent and were trading between highs and lows.

In the Budget, no changes were introduced to tax slabs. Meanwhile, the fiscal deficit target — the gap between the government’s revenue and expenses — for 2024-25 (FY25) was set at 5.1% of the gross domestic product (GDP).

Read the highlights here.

Finance Minister Nirmala Sitharaman wraps up the Interim Budget in less than an hour — 58 minutes to be precise. The government will present a White Paper on where the country was in 2014 and where it is now.

We will continue to provide detailed explanations and analyses of various aspects of the speech on this blog, from the data to the announcements, throughout the day.

Finance Minister Nirmala Sitharaman says India has pulled 25 crore people out of poverty in the past 10 years. The data is based on the National Multidimensional Poverty Index by NITI Aayog. This index uses the internationally acclaimed Alkire Foster methodology.

On the other hand, the National Multidimensional Poverty Index covers 12 indicators covering three areas, namely health, education and standard of living.

The health dimension includes Nutrition and Child & Adolescent Mortality indicators, the education dimension includes Years of Schooling and School Attendance indicators and the standard of living dimension includes six household-specific indicators namely, housing, household assets, type of Cooking Fuel, access to Sanitation, Drinking water and Electricity.

Gross and net borrowings for 2024-25 are estimated at lower than the current financial year 2023-24. This will make available larger credit for the private sector, which is seen to making investments at scale now. Gross borrowing for 2024-25 at Rs 14.13 lakh crore, and net borrowings at Ra 11.75 lakh crore.

No changes in direct or indirect tax rates, unlike in the 2019-20 interim Budget. However, there are some exceptions for startups.

Revised Estimates are being presented. Fiscal Deficit comes in at 5.8% — a tad lower than the target of 5.9%. Fiscal Deficit target for FY25 (next financial year) is set at 5.1%

Sitharaman: Increasing FY2024-25 capital investment outlay by 11.1% to Rs 11,11,111 crore (11.11 lakh crore), which represents 3.4% of the country’s GDP.

The interim budget is overall a vision statement of the Modi government for a third term. The assumption is that it is coming back into power. The confidence is backed by no new welfare schemes or higher outlay announcements so far. The widely expected increase in transfers under PM Kisan from the existing Rs 6,000/year hasn't materialised.

At the 2021 United Nations Climate Change Conference (COP26) in Glasgow, Prime Minister Modi announced that India would adhere to the so-called Panchamrit climate goals.

These are:

FM Nirmala Sitharaman spoke about the benefits of rooftop solar power generation and the government's plans for the same.

Just recently, shortly after returning from the Pran Pratishtha ceremony at the Ram Temple in Ayodhya, Prime Minister Narendra Modi announced the launch of a new programme to install rooftop solar systems on 1 crore houses. We explained what India's solar capacity looks like now, and the way forward. Click here to read the article.

Sitharaman says, “Our government will adopt economic policies that would foster growth… will take next-generation reforms and will build consensus with the states”.

The Finance Ministry, in a recent report, said that the country’s economy is likely to grow at over 7 per cent in the coming years and is expected to become the third-largest economy in the world in the next three years, with a GDP of $5 trillion. This growth will be driven by domestic demand along with supply-side measures, such as investment in infrastructure and measures to boost manufacturing.

Sitharaman: Apart from delivering high growth in the gross domestic product, the government is equally focussed on a comprehensive GDP — Governance, Development, Performance. There is macroeconomic stability, including in the external sector. Investments are robust, the economy is doing well. People are living better and earnings better. Average real incomes have increased by 50%. Inflation is moderate. People are getting enabled and equipped to pursue their aspirations. There is effective and timely delivery of programmes and large projects, she says.

The per capita income in 2013-2014 was Rs 68,572 at constant 2011-12 prices. In the advanced estimates for 2023-24, it is Rs 98,374. So, that works out to 43.5%.

Sitharaman: Digital public infrastructure (Aadhaar, UPI etc.) as a new factor of production, is instrumental in formalisation of the economy. This, combined with social and physical infrastructure, is aiding progress.

What exactly does DPI mean? Why is it significant in the age of Artificial Intelligence? We previously explained the Indian government’s push for ‘sovereign AI’ here.

Sitharaman: Over the past 10 years, 25 crore people came out of multi-dimensional poverty. The government saved Rs 2.7 lakh crore by preventing leakages through direct benefit transfers worth a total of Rs 34 lakh crore through PM Jan Dhan accounts.

Under the government’s electronic National Agriculture Market (e-NaM), 1,361 mandis (APMCs) have been integrated, benefiting 1.8 crore farmers and accounting for trading volumes worth Rs 3 lakh crore, says FM.

Finance Minister Nirmala Sitharaman began her Budget speech with references to the Union government's schemes in the social sectors. She refers to the 'four castes' that the Prime Minister mentioned earlier in December 2023.

Interacting with beneficiaries of Viksit Bharat Sankalp Yatra, the Prime Minister said, “Mere liye desh ki sabse badi chaar jatiyan hain. Mere liye sabse badi jaati hai garib. Mere liye sabse badi jaati hai yuva, mere liye sabse badi jaati hai mahilayen. Mere liye sabse badi jaati hai kisan. (For me, there are four biggest castes in the country. For me, the biggest caste is the poor. For me, the biggest caste is the youth, the biggest caste is women. For me, the biggest caste is farmers).”

What exactly do the terms interim Budget and Vote on Account mean? Why is an interim Budget needed at all? In this 2-minute-long video, we explain: