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Finance Minister Nirmala Sitharaman is set to present the full Budget for the fiscal year 2024-25 on July 23, marking a significant policy announcement for the new government. After concluding consultations with a diverse range of stakeholders, including industry representatives and social sector leaders, Sitharaman is ready to address the nation.
In FY16, an additional deduction for investment in the National Pension System (NPS) was introduced, allowing taxpayers to claim an extra Rs 50,000 deduction under Section 80CCD (1B) of the Income-tax Act. This move was aimed at providing pension income for retirement, regulated by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act, 2013.
The Central government plans to expand the Ayushman Bharat health insurance scheme, aiming to double coverage over the next three years and include individuals aged 70 and above. Discussions are also underway to raise the annual insurance coverage from Rs 5 lakh to Rs 10 lakh per beneficiary, projected to cost an additional Rs 12,076 crore annually according to the National Health Authority. These changes are expected to be announced during the Union Budget presentation.
The Budget Session of Parliament will run from July 22 to August 12, with Sitharaman presenting the Union Budget on July 23, her seventh consecutive annual financial statement. The Economic Survey is scheduled for July 22, preceding the Budget. This will be the first complete budget of the Modi Government 3.0, following the interim budget presented in February 2024.
Industry bodies are advocating for incentives to boost research and development (R&D) investments, corporate tax breaks, and a robust intellectual property rights framework to foster growth in the domestic pharmaceutical sector. Anil Matai, Director General of the Organisation of Pharmaceutical Producers of India (OPPI), emphasized the need for deductions on R&D expenditures and tax concessions for businesses.
The auto industry body SIAM has called for incentives to promote electric vehicles (EVs) and additional incentives for scrapping vehicles. SIAM President Vinod Aggarwal suggested a FAME 3 policy to offer financial incentives to electric two-wheelers, three-wheelers, and government-owned buses.
Following discussions between Andhra Pradesh Chief Minister N Chandrababu Naidu and Prime Minister Narendra Modi, the central government has agreed to establish an oil refinery and petrochemical hub in the state. The project, expected to attract Rs 60,000 crore in investments, underscores the government’s commitment to enhancing industrial infrastructure in Andhra Pradesh.
Goldman Sachs anticipates the upcoming Budget will prioritize capital expenditure without compromising fiscal consolidation, projecting the government will maintain the fiscal deficit target of 5.1 percent for FY25, with a potential reduction to 4.5 percent by FY26.
Assocham has suggested structural reforms in the agriculture sector to enhance productivity and income opportunities for farmers, promoting contract farming and investing in agri-infrastructure.
Educationists are hopeful for a significant increase in the allocation for the education sector, emphasizing research and development to foster innovation and keep pace with global advancements. Enhanced funding in R&D is seen as crucial for building a robust educational foundation and driving India towards a knowledge-based economy.
IDFC First Bank’s chief economist, Gaura Sen Gupta, anticipates the Budget will address rural demand and provide assistance to state governments. The interim budget maintained allocations for agriculture and rural sectors at 1.3 percent of GDP, suggesting potential increases in funding for initiatives like rural job guarantees and farmer support programs.
As the final Budget of 2024 approaches, market participants are concerned about a potential hike in capital gains tax. Samir Arora, founder of Helios Capital, cautioned against tightening the capital gains tax regime, suggesting that even progressive budgetary reforms could unsettle investors if tax policies do not align with market expectations.
Individual taxpayers are advocating for a revision of income-tax slab rates, particularly an increase in the Section 80C tax deduction limit, which currently stands at Rs 1.5 lakh. The Section 80C limit was last reviewed in 2014, with no changes made since then.
The Union Budget is likely to keep the fertilizer subsidy at approximately Rs 1.64 lakh crore, a significant reduction from the previous year’s expenditure of Rs 1.89 lakh crore. Lower urea imports and stable global input prices are expected to contribute to this reduction.
Sitharaman’s seventh complete budget is expected to focus on fiscal discipline, substantial capital investment, and initiatives to promote self-reliance and bolster manufacturing, continuing her track record of these priorities.
