An interim budget, also known as a vote-on-account, is a temporary budget presented by the ruling government when it is in transition or unable to present a full-fledged budget due to various reasons such as upcoming elections or a change in government.
Crucial & Important Expenditures
- An interim budget generally covers only crucial & Important and routine expenditures required to keep the current government functioning until a newly elected government can present a full budget.
- This includes expenditures like government salaries, debt servicing, and other necessary expenses to ensure the country’s security & continuity of essential services.
Avoid Policy Changes & Announcements
- Interim budgets usually avoid introducing new major policies or important changes in taxation units the new government presents the full budget.
- This concept ensures stability and future financial planning of the current government during the transition period.
Approval Procedure
- The interim budget is usually approved by the parliament or legislature to provide the necessary funds to meet the government’s financial requirements until a regular budget can be presented and passed by the new government
- This process involves scrutiny and debate to ensure transparency and accountability in financial matters.
For Short Period
- Interim budgets are usually in effect for a few months, until a full financial budget is presented by the new government.
- The temporary nature of the interim budget reflects its role as a bridge between two full-fledged budgets.
In conclusion, the interim budget is for maintaining financial stability and ensuring the smooth functioning of the current government during transitional phases. By focusing on essential expenditures, avoiding major policy changes, following the approval process, and prioritizing continuity, an interim budget serves as a temporary lifeline for the government until a comprehensive budget can be put in place.
Important Highlights of Interim Budget 2024-2025
Tax Rates
- The Interim Budget has not changed the current tax rates for direct and indirect taxes, including import duties.
- Corporate tax rates are still at 22% for existing domestic companies, and 15% for specific new manufacturing firms.
- Tax benefits for startups and extended investment incentives will be available till March 31, 2025.
Capital Expenses
- The Finance Minister has revealed an 11.1% increase in the capital expenditure for the fiscal year 2024-2025.
- Rs 11,11,111 crore has been allocated for capital expenditure, accounting for 3.4% of the GDP.
Growth Forecast
- Forecast for FY 2023-24 indicates a real GDP growth of 7.3%, with the Central Bank’s revised estimates.
- The International Monetary Fund has increased India’s economic growth forecast to 6.3% for FY 2023-24, with an expectation of emerging as the third-largest economy by 2027.
Fiscal Deficit and Market Debt
- The forecast of fiscal deficit is 5.1% of GDP in 2024-25, and with the target of reducing it below 4.5% by 2025-26.
- Gross market borrowings are projected at Rs.14.13 Lakh Crore & net market borrowings dated securities are projected at 11.75 lakh crore.
Revenue and Expenses Forecast (2024-25)
- The Government has estimated total receipts of Rs 30.80 lakh crore for the upcoming fiscal year, excluding borrowings.
- Projected total expenditure amounts to Rs 47.66 lakh crore.
- Tax receipts are expected to reach Rs 26.02 lakh crore, with a notable achievement of GST collections crossing Rs 1.65 lakh crore in December 2023.
Priorities
- Emphasizing the focus on empowering the Poor, Women, Youth, and Farmers through various initiatives and support programs.
Major Development Plans
Infrastructure
- The government has dedicated towards the Implementation of three key economic railway corridor projects.
- Expansion of airports under the UDAN scheme.
- The government has a plan to Promotion of metropolitan development through Metro Rail and NaMo Bharat.
Clean Energy Sector
- Governments are dedicated to growing wind and coal energy capacity, along with promoting CNG, PNG, and solar power.
Housing Sector
- Subsidized construction of 30 million affordable houses in rural areas, and a new scheme for the Middle Class.
Healthcare Sector
- Enhanced focus on cervical cancer vaccination, expanding Ayushman Bharat, and immunization initiatives.
Agricultural Sector
- Embracing ‘Nano DAP’ and policies to support dairy farmers and self-reliance in oilseeds.
Fishery Sector
- Establishment of ‘Matsya Sampada’ department to cater to the needs of fishermen.
For States Capex
- Continuation of interest-free loans for state-led reforms, with a special emphasis on the eastern region.
Others
- Establishment of a corpus and enhanced support for research and innovation in emerging domains.
- Formation of a high-powered committee to address demographic challenges and ensure the nation’s progress.