India’s Interim Budget 2024: Balancing Growth and Fiscal Prudence in an Election Year


On February 1st, 2023, amidst the buzz of upcoming general elections, Finance Minister Nirmala Sitharaman presented India’s Interim Union Budget for 2024-2025. This budget, unlike the usual detailed blueprints, serves as a placeholder until a new government takes office and presents its full-fledged financial roadmap. However, despite its interim nature, the budget still offers valuable insights into the government’s economic priorities and spending plans for the coming year.

Boosting Infrastructure with Increased Capital Expenditure:

A key highlight of the budget is the significant increase in capital expenditure by 11.1% to ₹11,11,111 crore. This translates to 3.4% of GDP and underlines the government’s commitment to infrastructure development as a driver of economic growth. This increased spending is expected to create jobs, stimulate demand, and enhance connectivity across the country. Specifically, the budget allocates funds for projects like:

Interim Budget
  • Upgrading existing railway infrastructure and converting 40,000 normal rail bogies to Vande Bharat standards.
  • Developing port connectivity and tourism infrastructure in island territories like Lakshadweep.
  • Long-term interest-free loans to states for infrastructure development.

Focusing on “Amrit Kaal”: Inclusive Development and Sustainability:

The budget reiterates the government’s vision for “Amrit Kaal,” a 25-year period leading up to the 100th anniversary of India’s independence in 2047. To achieve this vision, the budget outlines several initiatives promoting inclusive development, housing, tourism, and green growth. Some key measures include:

  • Targeting to build an additional 2 crore houses under the PM Awas Yojana (Gramin) in the next five years.
  • Launching a “Housing for All Middle Class” scheme to make homeownership more accessible.
  • Increasing the target for creating “Lakhpati Didis” (women entrepreneurs earning ₹1 lakh annually) from 2 crore to 3 crore.
  • Promoting electric vehicles and green hydrogen production to combat climate change.

Maintaining Fiscal Consolidation:

Despite the increased spending on infrastructure and social welfare schemes, the government remains committed to fiscal consolidation. The budget estimates a fiscal deficit of 5.1% of GDP for 2024-25, adhering to the target of reducing it below 4.5% by 2025-26. This commitment aims to control inflation and maintain investor confidence in the Indian economy.

No Major Tax Changes:

Interim Budget

The interim budget refrains from introducing any major changes in personal income tax. However, it emphasizes promoting digitization and formalization within the economy. This includes measures like:

  • Extending the time limit for filing updated income tax returns.
  • Encouraging the use of digital payments and online transactions.
  • Expanding the scope of Aadhaar-based identity verification.

Reactions and Future Outlook:

The interim budget has received mixed reactions. While some experts laud the increased focus on infrastructure and social welfare, others express concerns about the rising fiscal deficit. The upcoming general elections further add an element of uncertainty to the future economic landscape.

Interim Budget

However, the budget serves as a crucial stepping stone, laying the groundwork for the full budget that the new government will present post-elections. This future budget will provide a more comprehensive picture of the government’s long-term economic plans and priorities, shaping the trajectory of India’s economic growth and development in the coming years.

Looking Ahead:

India’s interim budget 2024 reflects the government’s attempt to balance the competing demands of economic growth, social welfare, and fiscal prudence in an election year. While the full picture will emerge with the post-election budget, the interim measures highlight the government’s focus on infrastructure development, inclusive growth, and sustainability. The success of these initiatives will depend on effective implementation and navigating the uncertainties of the upcoming elections. As India charts its economic course, the coming months will be crucial in determining the effectiveness of the budget and its impact on the nation’s future prosperity.

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