New Delhi3 months ago
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Finance Minister Nirmala Sitharaman said in her interim budget speech on Thursday, February 1 – ‘The government sees the country by dividing it into 4 castes, women, farmers, youth and poor.’ So were there any big announcements regarding these in the budget? The answer is no.
This time in the budget, neither was there anything cheap or expensive for the general public, nor was there any change in the tax slabs, nor was any big scheme announced this time. Yes, it is true that the scope of some schemes has been expanded.
This budget was presented before the Lok Sabha elections, but unlike the interim budget of 2019, there were no populist announcements in this budget. The government’s direct focus was seen on infrastructure development. The Finance Minister said that she will present a detailed roadmap of developed India in the July budget.
So in this story, analysis of the interim budget… but before that, see these graphics of which department got how much budget.
1. No change in tax slab, but tax waived in pending direct tax cases.
This time the government has not given any relief in income tax. If you choose the old tax regime, your income up to Rs 2.5 lakh will still remain tax free. However, under Section 87A of the Income Tax Act, you can save tax on income up to Rs 5 lakh.
On choosing the new tax regime, you will not have to pay tax on income up to Rs 3 lakh like before. In this, under Section 87A of the Income Tax Act, salaried persons can get tax exemption on income up to Rs 7.5 lakh and others on income up to Rs 7 lakh.
At the same time, tax will be waived off in pending direct tax cases from 1962 to financial year 2009-10. However, this will happen only if the tax payable on you is up to Rs 25,000. Similarly, it has been decided to withdraw income tax related cases up to Rs 10,000 pending between 2010-11 to 2014-15. One crore people will benefit from this.
Impact: Those who were expecting changes in the tax slabs have been disappointed. However, the government has extended the tax exemption for startups till March 2025, which they will benefit from. Withdrawal of tax cases will benefit 1 crore people.
2. Nothing is cheap or expensive, there is no change in indirect tax like direct tax.
Nothing has become cheap or expensive in the interim budget. This is because after GST implemented in 2017, only indirect taxes like custom duty, excise duty are increased or decreased in the budget.
Impact: This time the government has not made any changes in custom duty or excise duty. Therefore there will be no impact on the general public. Anyway, the increase or decrease in indirect tax affects only a few things.
3. No major scheme announced, but expanded the scope of some schemes for women
The work of building 3 crore houses under PM Awas Yojana (Rural) has been completed. At the same time, 2 crore more houses will be built in the next 5 years. Along with this, the Finance Minister said that the government will launch a housing scheme for the eligible middle class to buy or build their own house.
Under the Ayushman Bharat scheme, now all Anganwadi and Asha workers will be brought under its ambit. It was started in 2018. This scheme provides health security to the low income group citizens of the country. Under the scheme, treatment up to Rs 5 lakh is available for free.
In the budget, a target has been set to make 3 crore women millionaires under the Lakhpati Didi scheme. Earlier this target was 2 crores. So far, one crore women have been made millionaires under this scheme. Under the scheme, small loans are given to women for entrepreneurship industry, education or other needs.
Impact: Dhaval Ajmera, Director, Ajmera Realty & Infra India Limited, said that the announcement of the housing scheme for the middle class will help the public move towards buying instead of renting, which will improve the standard of living across the country.
There are about 40 lakh Anganwadi and Asha workers in the country. They will get the benefit of increasing the scope of Ayushman Bharat scheme. Increasing the scope of Lakhpati Didi Yojana will help more women to become self-reliant.
4. Government’s focus on infrastructure, budget increased by 11.1% to Rs 11.11 lakh crore
This year the central government has increased the infrastructure budget by 11.1% to Rs 11.11 lakh crore. Which is 3.4% of GDP. Last year this budget was Rs 10 lakh crore. The government will spend this money on mega projects like building airports, flyovers, expressways and hospitals.
The government has increased the budget on metro train schemes. Rs 21,336 crore will be spent on this. Earlier its budget was Rs 19,508 crore. It has also been announced to convert 40,000 bogies into Vande Bharat standard to improve the safety and convenience of passengers. Apart from this, three new corridors have been announced for the Railways.
- Energy and Cement Corridor: A separate structure will be built to carry cement and coal.
- Port Connectivity Corridor: This corridor will connect the major ports of the country.
- High Traffic Density Corridor: They will be built on routes where the number of trains will be more.
Impact: Connectivity will improve with the construction of airports, flyovers and expressways. Creation of corridors will help in reducing costs. Knight Frank India Chairman and MD Shishir Baijal said, the government’s decision to increase the budget will increase the country’s railways, roads and logistics infrastructure.
5. Government’s focus on tourism industry, states will be encouraged and interest free loans will be available.
States will be encouraged to develop prestigious tourism centers and brand them at the global level. A framework will be created for rating the centers based on the quality of facilities and services. For this, states will get interest free loan.
Regarding domestic tourism, the Finance Minister said that projects for port connectivity, tourism infrastructure and facilities will be started on our islands including Lakshadweep. This will also help in generating employment.
Impact: Shishir Baijal, Chairman and MD, Knight Frank India, said the increased focus on domestic tourism development will give a boost to the hospitality industry. Revenue in tourism is estimated to reach $23.72 billion (about Rs 1.9 lakh crore) in 2024. In 2023 it was $19.86 billion (about Rs 1.6 lakh crore).
6. Government’s focus on green energy, up to 300 units of free electricity will be available from rooftop solar.
To achieve the target of zero carbon emission by 2070, the government has decided to reduce the import of ammonia and methanol gas. For this, a facility will be set up in the country to convert coal into gas and make fuel by 2030. The number of electric vehicles will also be increased. 6,585 charging stations will be built for charging electric vehicles.
Through rooftop solar, one crore families will get up to 300 units of free electricity every month. The government has been running ‘National Rooftop Scheme’ since 2014. At the same time, PM Modi has also recently announced ‘Pradhan Mantri Suryodaya Yojana’. In this, rooftop solar will be installed in 1 crore houses.
Impact: These steps of the government will help in diversifying India’s renewable energy portfolio and reducing dependence on fossil fuels. Rajshree Murkute, Senior Director, Infrastructure Ratings, said that this step is a good sign towards transforming India into a $26 trillion economy by 2047.
Three economists on interim budget, not populist but economy strengthening budget
- According to Radhika Rao, senior economist at DBS Bank, despite focusing on women, youth and the poor, the government has avoided overt populism. Higher capex and faster fiscal consolidation have been given priority.
- According to Yezdi Nagporwala, chief executive of KPMG India, the interim budget has ensured that the fiscal deficit is kept under control. This also shows the government’s seriousness in following the green growth path.
- According to Devendra Kumar Pant, Chief Economist, India Ratings, the projected fiscal deficit figures for FY2024 and 2025 show that the government is serious about bringing the fiscal deficit down to 4.5% by FY26.