Union Budget 2024-24

The Economic Survey, a customary curtain raiser to the Union Budget while sounding a cautionary optimistic note highlighted some major issues especially arising out of climate change, geo-political challenges and, of course, capital intensive technologies, such as Artificial Intelligence (AI) as potential areas of concern. In fact, while dealing with the challenges/threats of AI, the Chief Economic Advisor, Shri V. Anantha Nageswaran very colorfully emphasized on the need to redesign the existing curricula to make them “AI compatible” and “AI employable”. Pegging the GDP growth for F/Y 2025 at a somewhat modest 6.5% (perhaps a case of overjealous optimism given the somewhat higher projections of the multilateral financing institutions and agencies), the survey highlights the challenges that the country faces and is likely to encounter as it endeavours to realize its dream of a “Viksit Bharat”.
Encapsulating this edifying backdrop, the Union Finance Minister Smt. Nirmala Sitharaman presented a record breaking seventh consecutive budget and in a sign of the changing times, delivered a paperless budget using a digital tablet encased in a traditional red “bahi khata” shaped red pouch – symbolizing an effort to synergize tradition with modern technology. Semantics and appearances apart, the Budget forecasts the fiscal deficit for FY 25 at a healthy 4.9% in contrast to the 5.1% forecast in the interim budget, and reflecting the focus on fiscal consolidation resolves to reduce the deficit to below 4.5% in the next year. Perhaps in a sign of the somewhat altered political scenario as also a reflection of the economic needs the focus is on nine priorities viz. productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security infrastructure, innovation, research and development and next generation reforms. Of course, an insightful analysis of the fine print conveys a package delicately balancing regional aspirations, societal balance, political compulsions dovetailed into the ultimate objective of sustained economic growth.
Given their political and economical significance, the focus on agriculture, special emphasis on job creation, skilling and internships to benefit the youth and support for MSMEs is bound to have an exponential trigger effect in accelerating economic growth. All told, a Budgetary exercise pump-primed by the aim fiscal consolidation and wholesome inclusive growth. The only concern, as always being the last mile delivery and resultant beneficial effect of the schemes to translate intentions into results.
Broad fiscal direction apart, on the indirect taxes front, the Budget seeks to iterate and rationalize custom duties, with the aim, in the Finance Minister’s own words to “support domestic manufacturing, deepen local value addition, promote export competitiveness and simplifying taxation while keeping the interest of the general public and consumers surmount”.
On the direct taxes front, the stock market perhaps expectedly has not taken kindly to the Finance Minister’s attempts to tinker with the regime of taxation of capital gains with the slew of wide-ranging changes with epochal ramifications coming into immediate effect. As regards personal taxes again as somewhat expected, in an attempt to popularize the new scheme and endeavour to move to a somewhat exemption free personal taxation ecosystem, the new regime (the “default regime”) has been sought to be made more attractive. With the ghost of the Direct Taxes code having already been interminably buried, the promise of a time bound comprehensive review of the Income-tax Act is certainly welcome. What is also welcome is the rationalization of the TDS regime with the tinkering of the rates and efforts towards reduced litigation by decriminalizing certain delays and defaults. The increase in the limits of filing appeals before higher appellate authorities, and the intention to introduce another “Vivad Se Vishwas Scheme 2024” will help to ease the burden on the legal system. However, the hope for a vibrant, all-encompassing and dynamic alternate dispute resolution mechanism which could effectively reduce pending litigation, reduce arrears of taxes and garner substantial revenue has been effectively belied. The series of changes on the tax administration front, including those relating to assessment/reassessment, taxation of charitable organizations and the renewed thrust towards simplification is likely to embellish the user-friendly face of the department with resultant positive effects on voluntary compliance by the taxpayers.
All told a budgetary exercise which, while attempting to synergize rational economics with sagacious politics, endeavors to propel India on a path of sustained economic growth and wholesome, inclusive all round development with equity and justice as its bulwarking focus