Interim Budget 2024: What to expect and what not to expect from FM Nirmala Sitharaman

As the 2024 mid-term budget approaches, India is eagerly awaiting Finance Minister Nirmala Sitharaman’s plans. While it is important to remember that the interim budget is focused on maintaining essential services until a new government takes over, several key expectations remain.

An interim budget, also known as a vote of account, is a temporary financial plan presented by a government when it does not have the time or authority to present a full budget.

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2024 budget dates

The interim budget for the 2024-25 financial year will be submitted on February 1, 2024. According to India’s practice, the mid-term budget will be announced before the general election, which is expected to be held from April to May 2024.

Due to its temporary nature, major policy changes are unlikely to occur. However, there are strong expectations across industries:

highest expectations;

• Salaried taxpayers: Increase income tax brackets or deductions to stimulate consumer spending.
• Farmers: Continue or increase PM Kisan’s spending to support rural incomes.
• Infrastructure: Promote infrastructure development, especially railways, highways and urban-rural fringe areas.
• Education and medical care: Increase funding for education and medical care and improve social welfare.
• Small, medium and micro enterprises: Support measures for small, medium and micro enterprises to encourage entrepreneurship.
• Digital Economy: Policies and incentives to accelerate the growth of the digital economy.
• Green energy: Promote the construction of clean energy and renewable energy infrastructure.

Other key expectations:

• Job creation: Measures to promote job creation through skills programs and encouraging domestic manufacturing.
• Inflation control: maintaining price stability through targeted intervention and fiscal discipline.
• Social welfare: Continue to support vulnerable groups such as farmers, the elderly, and women.

Here are some things not to expect in the 2024 interim budget:

Overhaul: Given its temporary nature, the interim budget is unlikely to introduce major policy changes or structural reforms. These often require detailed planning and implementation, which is not feasible within a limited time frame.

Populist Project: While some tweaks to existing programs are possible, large-scale welfare programs or populist initiatives aimed at appealing to voters are unlikely. The government does not want to sacrifice long-term fiscal discipline for short-term electoral gain.

Major tax reforms: Don’t expect major changes to income tax tables, deductions or exemptions. Minor adjustments or rationalizations are possible, but the government is likely to avoid undertaking complex reforms ahead of a full budget.

High consumption: Because of its bridging role, the interim budget focuses on maintaining essential services and meeting existing commitments. A significant increase in spending beyond what is needed for smooth operations is not possible.

These are just some of the expectations and analyzes based on advice from industry experts in different fields. The final budget may prioritize different areas, and certain expectations may or may not be met. You can tune into tomorrow’s live demo for the actual announcement.

How to watch Budget Live?

• You can watch the live broadcast on various TV channels like Sansad TV, Doordarshan and major news channels.
• Many media outlets will provide live online broadcasts and updates.
• You can also follow the official Twitter account of the Ministry of Finance (@FinMinIndia) for real-time updates.

Why this year’s (2024) medium-term budget?

1. Transition period: When a new government comes to power after an election, it will need time to assess its fiscal situation and formulate its own long-term budget policies. During this period, the outgoing government presents a budget to keep the country running smoothly until a new government takes office.

2. Pre-selection period: It is a tradition in India not to present a complete budget a year before a general election. This is to prevent the current government from using the budget as a political tool to attract voters with populist programmes. Therefore, until the new government is elected and presents its first full budget, an interim budget will be presented to cover government spending.

Generally speaking, interim budgets are temporary measures that are required under specific circumstances. While it ensures smooth operations during the transition period, it is important to remember that it does not replace a full budget with a comprehensive vision and long-term economic direction.