Budget 2024 highlights: We are aiming for a fiscal deficit target of 5.1% for FY25, says FM Sitharaman

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The business community has responded positively to the interim budget presented by Finance Minister Nirmala Sitharaman on Thursday, February 1, 2024. Key industrialists have expressed satisfaction with the government’s approach towards fiscal discipline and inclusive growth. Read more here

In the highly anticipated interim Budget for 2024, Finance Minister Nirmala Sitharaman made no adjustments to the insurance sector, leaving many industry experts and stakeholders with mixed reactions.

The insurance sector had been advocating for an extension of the ₹50,000 tax exemption for the National Pension Scheme (NPS) to include pension and annuity plans. However, these expectations were not met in the interim Budget.  Read more here

The government has set aside ₹15,500 crore for various programmes in the coming fiscal year. This includes a focus on semiconductors and the Production-Linked Incentive (PLI) scheme for mobile and IT hardware.

A significant chunk of ₹4,203 crore has been earmarked for incentives for assembly, test, and packaging plants. This is expected to benefit projects by companies like Micron, Foxconn-HCL joint venture, and Tata Group. Read more here

In a post-budget interview with CNBC-TV18, Revenue Secretary Sanjay Malhotra shed light on the remarkable surge in revenues following the implementation of a 28% Goods and Services Tax (GST) on online gaming. The Finance Minister, Nirmala Sitharaman, presented the interim Budget on Thursday, February 1.

Malhotra said since the introduction of the 28% GST on online gaming on October 1, 2023, the government has seen a sixfold increase in revenue. Read more here

Moody’s Investors Service said on Thursday that India’s interim budget has indicated a continued narrowing of the fiscal deficit after the COVID-19 pandemic. However, it is important to note that before the pandemic, India’s fiscal deficit was below 5%.

Moody’s last August had affirmed a ‘Baa3’ rating on India with a stable outlook. A higher rating implies lower economic risk, allowing a country to borrow at cheaper rates.

Moody’s also noted that while most countries have not defaulted, a lack of default history is not a marker of a high credit rating. The agency also said that it believes it has given credit to India for progress in fiscal deficit consolidation. Read more here

“The Interim Budget 2024 is extremely well thought of and clearly a step towards the vision of Developed India @ 2047. The FM has stayed away from populist measures in an election year and needs to be congratulated for the same.

By limiting the deficit to 5.1% of the GDP which should be achievable given the rather conservative tax receipts, fiscal prudence has been given the due importance. Lower borrowings and thus lower borrowing costs will help prioritize domestic spends and guard against external shocks.

The increased capital expenditure of ₹11.11 lakh crore, constituting 3.4% of the GDP, bodes well for the infrastructure led GDP growth and will also crowd in the private sector investments as we are now witnessing improvements in consumer sentiments (and demand),” said Anil G Verma, Executive Director and CEO, Godrej & Boyce.

In the interim budget presented on Thursday, Finance Minister Nirmala Sitharaman has allocated ₹900 crore for the nation’s ambitious Khelo India programme.

The Khelo India is a Central government scheme aimed at bolstering sports culture at the grassroots level across India. The National Programme for Development of Sports, popularly known as Khelo India, was launched in 2018 by then Union Sports Minister Col. Rajyavardhan Singh Rathore. Read more here

“The 2024 interim budget’s increased capital expenditure for infrastructure development is a strategic and commendable move. It promises to accelerate economic growth and positively impact the logistics sector. The emphasis on expanding air connectivity, along with the development of existing airports and the establishment of new ones, is a pivotal step that aligns with our advocacy for efficient multimodal logistics.

FedEx welcomes the forward-looking approach of the 2024 interim budget, reflective of the ‘Viksit Bharat’ vision. We remain committed to actively contributing to India’s growth journey, aligning our efforts with the government’s vision for a smarter and more sustainable logistics infrastructure in India,” said Kami Viswanathan, President – MEISA, FedEx Express.

Union Finance Minister Nirmala Sitharaman highlighted India’s robust economic performance, boasting three consecutive years of 7% growth, solidifying its status as the fastest-growing economy in the G20.

Emphasising the significance of the interim Budget presented ahead of the elections, Sitharaman articulated the essence of GDP as Governance, Development, and Performance. “It is an interim budget presented before just the elections. GDP- Governance, development and performance,” she said addressing a presser after presenting the budget.  Read more here

“The 2024 Interim Budget is a decisive step towards India’s economic sustainability, in line with the ‘Viksit Bharat by 2047’ vision. The fiscal responsibility reflected in the 5.8% GDP fiscal deficit is commendable.

The ‘First Develop India’ focus promotes FDI, aligning with our global collaboration goals. I anticipate progressive policies supporting fintech, digital lending, and digital skills,” said Abhay Bhutada, managing director of Poonawalla Fincorp.

DIPAM Secretary Tuhin Kanta Pandey stressed the need to look at disinvestments in a holistic way, including dividends, while also highlighting that the combined market capitalisation of all central public sector enterprises (CPSEs) today is ₹58 lakh crore.

Pandey highlighted that 61 listed CPSEs, 16 public sector enterprises (PSBs) and public sector insurance (PSI) firms have risen by over ₹42 lakh crore in three years, rising from ₹15 lakh crore at the start of 2021. Read more here

“In the words of Mahatma Gandhi, “the true measure of any society can be found in how it treats its most vulnerable”. And Government by its focus on “GYAN” – Gareeb (Poor), Youth, Annadata (Farmers) and Naari (Women) has targeted to achieve exactly that.

The budget gets full marks for Credibility of numbers, Continuity on structural reforms and Conviction of building a developed economy in a highly sustainable and equitable manner. The conviction is commendable despite a challenging global backdrop.

The focus has shifted on quality rather than quantity of spending, on outcome rather than outlays. There is an unwavering focus on building world-class infrastructure – physical, digital as well as social. Social welfare received targeted attention for enhanced quality outcomes. A distinct highlight was the creation of an Innovation fund to foster a self-reliant, knowledge-based economy,” said Navneet Munot, MD and CEO, of HDFC AMC.

Finance Minister Nirmala Sitharaman has allocated ₹ 177.24 crore for Pradhan Mantri Shram Yogi Maandhan (PM-SYM) in the interim budget, which was presented on Thursday.

This is a voluntary pension scheme initiated for unorganised sector workers. Launched in 2019, the scheme aims to provide old-age protection. Read more here

“The budget is distinctly positive for fixed income market. The budget continued its push on public capex while balancing fiscal responsibility. The fiscal deficit target of 5.1% for FY25 was below all consensus estimates & the most positive aspect was gross borrowing number of 14.1 trillion well below market estimates of 15-15.2 trillion,” said Anurag Mittal, Head of Fixed Income at UTI AMC.