 "Union Budget 2024: Key FAQs on interpreting the Budget, economic priorities")
As the country eagerly anticipates Union Budget 2024, Prime Minister Narendra Modi’s government is set to unveil its fiscal strategy for the remainder of the financial year.
Scheduled for presentation in the Lok Sabha in the coming weeks, this crucial document not only outlines the government’s projected income and expenditure but also establishes economic priorities and resource allocation that will shape the nation’s trajectory.
Understanding the Budget process
The Budget process commences with the Finance Minister’s address in the Lok Sabha, setting the tone with a comprehensive vision for the upcoming fiscal year. Part A of the speech outlines ambitious strategies across sectors crucial to India’s development, including:
- Agriculture
- Healthcare
- Education
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- Infrastructure
- Small and large enterprises
- Service industry
- Women empowerment
- Startups
- Banking and financial services
- Capital markets
This section not only highlights the government’s reform agenda but also articulates specific targets such as managing fiscal deficits and strategic borrowing plans to fuel economic growth.
Tax reforms and income adjustments
Part B of the Budget speech centres on tax reforms, excluding the Goods and Services Tax (GST), and addresses both direct and indirect taxes. Notably, the last full Budget introduced adjustments in income tax slabs and rates, including raising the rebate limit to Rs 7 lakh per annum under the new tax regime. These changes were aimed at simplifying tax structures and stimulating economic activity.
Budget at a glance
The ‘Budget at a Glance’ document offers a detailed overview of key budget objectives for the upcoming financial year. It covers critical areas such as tax revenue, non-tax revenue, government capital and administrative expenditures. Additionally, it outlines the projected fiscal deficit — indicating the difference between Centre’s expenditure and revenue — and sets targets for nominal gross domestic product growth in the next fiscal year.
Furthermore, the ‘Budget at a Glance’ document provides specific insights into allocations for subsidies on fuel, fertilizer, and food. It elucidates the planned distribution of the Centre’s divisible revenues to states and Union territories, highlighting the allocation of financial resources.
Moreover, the document emphasises expenditures on major schemes, distinguishing between Central sector schemes fully funded by the Indian government and centrally sponsored schemes jointly financed by both the Centre and state governments.
Revenue and expenditure breakdown
To comprehend the Budget comprehensively, the next vital documents are the Revenue Budget and Expenditure Budget.
The Revenue Budget details projected income sources, including income tax, corporate tax, GST, excise duty, and non-tax revenues such as disinvestment, privatisation, telecom, aviation, and others.
The Expenditure Budget breaks down the total budget allocation by the ministry, reflecting planned spending across sectors like defense acquisitions, MGNREGA, PM Kisan, primary education, healthcare, administrative costs, specific infrastructure projects, and more. It provides a detailed insight into the central government’s fund allocation strategy.
Legislative process
The approval process for the Budget involves rigorous scrutiny in Parliament. The Finance Bill formalises financial measures while also amending key statutes such as the RBI Act, Income Tax Act, Companies Act, and Banking Regulation Act in line with the announced measures. Simultaneously, the Demands for Grants detail expenditure estimates, crucial for parliamentary approval and allocation of funds to states and Union Territories.
Comprehensive Budget documents
In addition to the Finance Minister’s speech, other critical documents presented to the Parliament include:
- Annual financial statement
- Fiscal policy statements mandated under the FRBM Act
- Macro-economic framework statement
- Medium-term fiscal policy cum fiscal policy strategy statement
- Expenditure Budget
- Receipt Budget
- Expenditure profile
- Budget at a glance
- Memorandum explaining the provisions in the Finance Bill
- Output outcome monitoring framework
- Key features of Budget
- Implementation of Budget announcements