With the impending general election, it was evident that the Interim Budget 2024 would not entail major legislative changes. Despite these limitations, Finance Minister Nirmala Sitharaman made several progressive announcements that will serve as a stepping stone for the new government to maintain the economic growth trajectory.
The finance minister set the tone by laying out a five-year strategic plan with ‘Viksit Bharat’ as the guiding goal. The plan aligns with the government’s vision of making India the third-largest economy by 2027 and presents a visionary roadmap to meet the aspirations of a developed nation.
Economic growth, infrastructure development, the creation of employment opportunities, financial assistance to farmers, and the promotion of new technologies were the key focal points in her announcement. The primer for attaining ‘Amrit Kaal’ is founded on the guiding principle of “reform, perform, and transform”, prominently featuring state and stakeholder consultations for next-generation reforms. While increasing capital expenditures for upgrading financial infrastructure, the government has not lost sight of financial prudence and has kept its promise (made in the FY 2021-22 budget) to reduce the fiscal deficit below 4.5 per cent by 2025-26.
Consistent with her previous budgets, the finance minister emphasised ‘all-around all-pervasive and all-inclusive growth goals’ for the nation, building upon the mantra of ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas’. The focus continues to be on formulating and implementing programmes with an underlying philosophy of inclusivity, encompassing not just social but also geographic aspects. The aim is to achieve strong GDP growth and a broader ‘GDP’ that encompasses ‘Governance, Development, and Performance’.
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Trade, tax, and targets
The vision for ‘Viksit Bharat’ aligns with popular expectations, envisioning a “prosperous Bharat in harmony with nature, modern infrastructure, and opportunities for all citizens and all regions”. The Interim Budget 2024 provides guidance for formulating policies to foster and sustain growth, facilitate inclusive and sustainable development, improve productivity, and generate resources to power investments.
On international trade, the government announced a vision to strengthen the investment and trade treaty network and negotiate multiple Bilateral Investment Treaties (BITs) in the spirit of ‘First Develop India’. Indications that the India-Middle East-Europe Economic Corridor will be a crucial component for future economic growth suggest that India will establish itself as a trade hub for centuries.
On tax reforms, a few tweaks were made, including extending the sunset clauses to 31 March 2025, for start-ups, income of sovereign wealth funds, pension funds, and exemptions to units located in IFSC. The withdrawal of petty and old outstanding tax demands has been announced to enhance taxpayer services.
While maintaining the focus on growth, the environmental commitment of achieving ‘net zero’ by 2070 has not been lost sight of. The government has promised to expand and strengthen the e-vehicle ecosystem and promote Blue Economy 2.0 for the restoration of measures promoting climate-resilient activities. The rooftop solarisation initiative has been launched to enable 10 million households to obtain up to 300 units of free electricity monthly.
The focus remains on catalysing growth and development with consideration for sustainable and environment-friendly alternatives. The Interim Budget 2024, even without legislative changes, has managed to convey a key message for India to achieve its goal of Viksit Bharat by 2047.
Shankey Agrawal is Partner at BMR Legal Advocates and head of International Trade, Customs and GST.
Nikky Jhamtani is Managing Associate at BMR Legal Advocates, Corporate and International Tax.
With inputs from Shreya Wadhera, Associate at BMR Legal Advocates.
(Edited by Prashant)