Just a stopgap measure or some big bang announcement?What to expect from the Modi government’s medium-term budget

Finance Minister Nirmala Sitharaman will present the interim budget on Thursday, February 1, ahead of the much-anticipated Lok Sabha polls. The comprehensive budget for the fiscal year from April 1, 2024 to March 31, 2025 will be presented after the election of the new government.

As a result of the massive economic growth, the government received huge tax revenues, which helped it reduce its deficit. Therefore, analysts say Sitharaman, who will present her sixth budget, has enough options to maintain current levels of infrastructure investment and take concrete steps to assist Prime Minister Narendra Modi’s election-related priority sectors, which include women, farmers, disadvantaged groups and young people.

Goldman Sachs predicts that by 2075, India will become the world’s second-largest economy and is currently the world’s fifth-largest economy, second only to the United States, China, Japan and Germany.

Analysts said the interim budget is likely to bring some good news, including income tax exemption limit, announcement on levy of Employees Provident Fund Organization, boost in FAME scheme which incentivizes electric vehicle (EV) manufacturers, increased allocation to PM Kisan, ETC.

The medium-term budget focuses on a breakdown of the government’s expected revenue and expenditure before a new government is formed. A comprehensive budget, on the other hand, covers all aspects of government finances, including revenue, expenditure, allocations and policy announcements.

Major policy announcements that could burden the next government cannot be included in the interim budget. According to the Election Commission of India code of conduct, the interim budget cannot contain any major programs that may affect voters. Furthermore, the ruling government is not allowed to submit the economic survey along with the interim budget.

After the provisional budget is proposed, the parliament passes a “record vote”. This provision allows the government to obtain parliamentary approval for basic government spending, such as wages and daily expenses. This validity period is usually up to two months, but can be extended.

In 2016, when then Finance Minister Arun Jaitley presented the first combined budget for the financial year 2017-18, the government decided to merge the railway budget with the union budget.

India launched several Vande Bharat trains in 2023 and deployed faster non-air-conditioned service Amrit Bharat trains. As India accelerates its modernization drive and unblocks its rail network with dedicated freight corridors, it now also harbors dreams of eliminating train waiting lists. With such aspirations, the interim budget’s stance on railways is highly anticipated.

Like the three previous full union budgets, the 2024 interim union budget will be delivered in a paperless format.

All union budget documents including Annual Financial Statement (popularly known as Budget), Demand for Appropriation (DG), Finance Bill etc. will be made available on the ‘Union Budget Mobile App’ for easy access of budget documents by the users and the easiest usage by Members of Parliament and the public of digital convenience.

It is bilingual (English and Hindi) and available on Android and iOS platforms.

The application can also be downloaded from the Union Budget Portal (www.indiabudget.gov.in).

The budget documents will be available on the mobile app after the Federal Finance Minister completes his budget speech in Parliament.