India’s Interim Budget: stability, housing, and defence in the spotlight

The government demonstrated a commitment to welfare schemes, with increased allocations for major initiatives in FY25. Notable examples include a 43.3% hike for MNREGA (Rs 86,000 crore), a 4.2% increase for Ayushman Bharat-PMJAY (Rs 7,500 crore), and a 33.5% boost for PLI Schemes (Rs 6,200 crore).

India’s Finance Minister, Nirmala Sitharaman, unveiled the Interim Budget for the upcoming fiscal year, beginning April 1, 2024. Aligning with expectations of fiscal prudence, the government refrained from altering tax slabs and avoided grand announcements, focusing on stability rather than radical changes as the Modi government eyes a third term post the Lok Sabha elections in April-May.

In a move aimed at providing relief to taxpayers, all income tax slabs remained unchanged, and there were no commitments to radical revisions (revdis). Direct and indirect tax rates, including import taxes, were left untouched. Notably, the government withdrew all outstanding disputed direct tax demands up to Rs 25,000.

The housing sector took centre stage with the announcement of a new housing scheme for the middle class. Under the PM Aavas Yojana, the government plans to construct 2 crore houses and 10 million of these homes will receive free electricity through a rooftop solar program.

Crucial for India’s growth, the capital expenditure (capex) target was increased by 11.1% to reach Rs 11.11 lakh crore. Although this marks a slowdown from the 37% spike in the last budget, it reflects the government’s measured approach to restricting public spending.

The government set ambitious targets for total revenue receipts for FY25, estimating them at Rs 30 lakh crore, up from the revised estimate of Rs 26.99 lakh crore in FY24. The focus on revenue generation underscores the need to fund developmental initiatives.

In a bid to boost tourism, the government announced interest-free loans to states, specifically targeting the development of tourism in Lakshadweep. This move aims to encourage travel and enhance the economic potential of the picturesque islands.

The defence budget saw a 4% increase to Rs 6.2 lakh crore, emphasizing the government’s commitment to securing the nation’s borders. In the healthcare sector, facilities under the Ayushman Bharat scheme will be extended to all Aasha and Aanganwadi workers, while the government plans to establish hospitals in every district. Additionally, a vaccination drive for cervical cancer will target girls aged 9 to 14.

The aviation sector is set to expand with the launch of 517 new routes under the Udan Scheme. Defence allocation witnessed a substantial increase of nearly 20%, reaching Rs 6.22 lakh crore.

The government demonstrated a commitment to welfare schemes, with increased allocations for major initiatives in FY25. Notable examples include a 43.3% hike for MNREGA (Rs 86,000 crore), a 4.2% increase for Ayushman Bharat-PMJAY (Rs 7,500 crore), and a 33.5% boost for PLI Schemes (Rs 6,200 crore).

In terms of divestment, the government reduced the target for the current fiscal year to Rs 30,000 crore, with a set target of Rs 50,000 crore for FY25. However, there were no new announcements regarding the privatization of state-owned companies.