Budget 2024 Highlights: Experts see lower fiscal deficit, focus still on capex

The Central Industrial Security Force (CISF) will be deployed at the Parliament soon, so the familiarisation training of its 140 personnel has already started, officials said on Tuesday. This deployement will take place ahead of the Budget session in the Parliament.

In the past, markets have surged up to 1000 points after the Budget is announced. It is likely that a similar effect could be witnessed this year.

With the push for the renewable energy sector, Budget 2024 can see a boost in funding for the EV and green hydrogen sector.

The government has increased import duty on gold and silver findings and coins to 15 per cent by imposing a 5 per cent Agriculture Infrastructure Development Cess (AIDC).

An AIDC of 4.35 per cent has also been levied on 'spent catalyst or ash containing precious metals', said a notification of the Central Board Of Indirect Taxes & Customs (CBIC). (PTI)

Telecom infrastructure providers are seeking availability of input tax credit on telecom towers, and have made a plea for an increase in tax depreciation rate and rationalisation of TDS provisions in their Budget wishlist. (PTI)

The Budget 2024 session will begin on January 31, with the interim budget presentation on February 1.

Finance Minister Nirmala Sitharaman had earlier announced that no major tax announcements will be made during the presentation of the interim budget on February 1.

The real estate sector’s expectations from Budget 2024, which is a vote on account or an interim budget, include changes in the definition of affordable housing, increase in exemption on principal amount as well as the interest paid on home loans, infrastructure status for the real estate sector and greater retail engagement in Real Estate Investment Trust or REITs. Read More.

Industry body India Energy Storage Alliance (IESA) has demanded a 10-year tax holiday for projects with standalone battery energy storage using renewable energy.

In a pre-budget memorandum sent to the finance ministry, IESA also suggested to exempt custom duty for energy storage systems being imported particularly from the countries where India has ties on free-trade agreements like Korea, Taiwan, Japan, Vietnam, the USA, EU countries etc.

Fiscal Deficit

This term refers to the difference between the total spending of the government and revenue receipts of the previous financial year. This gap is then filled by borrowing funds from the Reserve Bank of India, among other measures.

Capital expenditure (capex)

The capital expenditure of a country is the total amount of money that the Centre is planning to use development, acquisition or degradation of machinery and assets linked to boosting the economy.

The government may make the National Pension System (NPS) more attractive by extending tax concessions on contributions and withdrawals especially for senior citizens above 75 years.

The Economic Survey presented during the Budget session is a flagship document summarising the performance of the economy in the ongoing financial year. It sets the stage for the budget of the upcoming financial year to be presented.

Budget 2024 LIVE updates: Government spending is balanced by its revenues and loans. Take a look at how the government got its money for expenditure, as mentioned in the Union budget document 2023-24.

The Budget draws its major share from borrowings and liabilities, constituting the largest chunk of 34 per cent. GST contributes 17 per cent, with Income Tax and Corporation Tax each making up 15 per cent. Union Excise Duties and Non-tax revenue contribute 7 per cent and 6 per cent, respectively.

The Indian budget is closely watched by businesses, investors, and the general public as it provides insight into the government’s economic policies and priorities and can have a significant impact on the economy and people’s lives

1. The fiscal year runs from April 1 to March 31, requiring parliamentary approval of the budget before April 1.

2. The budget process starts six months before the financial statement is presented in Parliament, commencing deliberations in August-September of the previous year.

3. Ministries receive a circular to prepare estimates, followed by extensive consultations with Niti Aayog, and approved data is sent to the finance ministry.

4. The finance ministry allocates revenues to departments; disputes go to the prime minister or Union cabinet for resolution.

5. The finance minister engages in pre-budget meetings, discussing proposals and demands with stakeholders, finalising decisions with the prime minister.

6. Before the budget presentation, a 'halwa ceremony' is held, initiating a 'lock-in' for ministry staff to prevent leaks, lasting until the financial statement is tabled.

7. The budget document is presented in the lower house of Parliament, Lok Sabha, on February 1, a shift from the previous practice before 2017 when it occurred on the last day of February.

READ IN DETAIL: How is union budget prepared?

"To achieve the (2025-26) 4.5% deficit target, total expenditures would need to rise by no more than 7% per FY on average...meaning an even more aggressive cut to expenditures is likely in the coming years," said Alexandra Hermann, lead economist at Oxford Economics.

Reuters

Centre will aim to achieve a lower deficit in the fiscal year 2024-25, even as it raises capital expenditure to a record level, prioritising infrastructure investment, as per a Reuters poll of economists.

Union Budget 2024 LIVE: The interim budget focuses on the government's expected receipts and expenditures until the new government is established. In contrast, a comprehensive Budget encompasses all aspects of government finances, including earnings, spending, allocations, and policy declarations.

A full-year Budget serves as a strategic guide, outlining the nation's economic trajectory for an entire fiscal year, while the interim budget specifically addresses financial details for the transitional period.

READ IN DETAIL: What is interim budget?

Union finance minister Nirmala Sitharaman will present the Narendra Modi government's interim budget on February 1.