The interim budget for 2024/25 to be presented by Union Finance Minister Nirmala Sitharaman is expected to be heavy on political messaging while enhancing Modi government's drive for inclusive growth.
Ms Sitharaman has already stated that there won’t be any major announcement as the Vote on Account will be only for three months allowing the new government to present a full budget. Yet, the government is expected to strike a balance between pre-election political messaging, fiscal consolidation needs and continued focus on capex, claim economic experts.
WOMEN TO THE FORE
Modi government's hallmark can be attributed to increased participation of women in every sector. Thus, support to women entrepreneurs will be inevitable in the interim Budget. Experts further suggest a long-term taxation policy and steps to boost consumption and savings are among the expectations from the interim budget.
The government may substantially increase the annual dole to female farmers to attract women voters. The uptick could be from present Rs 6000 per annum to anywhere up to Rs 12000. But the policy will only cost Rs 11952 crore annually, a meagre amount for the Union government.
The government wants to keep its major subsidies in check for the next fiscal year at current year's level of Rs 3.99 lakh crore. Modi extended his free foodgrain programme for the next five years, and that too will incur very little additional spending as it has been running a subsidised foodgrain programme for years.
HOUSING FOR ALL
Sitharaman is likely to raise allocations for low-cost housing by more than 15% to Rs One lakh crore for 2024/25 from Rs 79,000 crore allocated in the 2023/24 budget. With a population of more than 1.4 billion, country faces a shortage of more than 20 million houses in rural areas according to the government's internal estimates. The urban housing shortage, estimated at more than 1.5 million, was expected to double by 2030.
Union government offers a subsidy ranging from Rs 1 lakh to Rs 2.67 lakh to households securing bank loans for housing construction. This is in addition to the subsidies from state governments.
The country has spent Rs 2.4 lakh crore over the last five years under this scheme to provide support for rural and urban low-cost housing, as per government data. The scheme was supposed to end in December 2024 but the government could extend it for another three-to-five years as the targets could not be met.
Finance Ministry has proposed an increase in financial assistance to about Rs two lakh for each house in rural areas, and an interest subsidy on home loans of up to Rs 50 lakh in urban areas.
INCOME TAX LIMIT
The government may also hike income tax exemption limit from present Rs 2.5 lakh in old system and Rs 3 lakh in the new regime of income tax calculation. FM is likely to enhance the limit by Rs 50,000 in both regimes, giving succor to a large section of salaried tax-payers. Even standard deduction may be increased by present Rs 50,000 to Rs one lakh, economists feel.
Although it's an interim Budget, yet there may be some concession to be offered to individual taxpayers under section 87A under which the overall tax exemption limit may be increased to Rs 8 lakh from now Rs 7 lakh, inclusive of rebates.
Further tax relaxation for women entrepreneurs and increased paid holidays for working mothers can be expected from the interim Budget. Increasing Rashtriya Swasthya Bima Yojana grants and enhanced education benefits for girls will be crucial steps for empowering half the population in India.