Interim Budget 2024: Increased Capital Expenditure, Push For Renewable Energy

As expected, finance minister Nirmala Sitharaman did not make major announcements on Thursday during the presentation of the Interim Budget 2024. However, Sitharaman highlighted what the government plans in the coming months including a housing scheme for the middle class, a cervical cancer vaccine for girls, and 300 units of free electricity through rooftop solarisation among others. 

A significant part of Sitharaman’s speech was to highlight the achievements of the two tenures of the Narendra Modi-led BJP government at the Centre. Sitharaman said, “The impact of all-round development is discernible in all sectors… the economy is doing well.” 

Sitharaman claimed that the government had enabled them to pursue their aspirations with the average real income of the people having increased by 50%. 

While India is headed to polls later this year, with the second tenure of the Modi government coming to an end, Sitharaman said that the government will “facilitate inclusive and sustainable development” by adopting the principles of ‘Reform, Perform, and Transform’. 

There would be special attention given to the eastern parts of the country. Sitharaman said, “Our government will pay utmost attention to make the eastern region and its people a powerful driver of India’s growth.” 

Here are highlights from her speech: 

Tax And Expenditure

The capital expenditure outlay was increased for the next year by 11.1% to Rs 11.11 lakh crore, which would be 3.4% of the gross domestic product (GDP). For FY2024-25, the total receipts other than borrowings and the total expenditure have been estimated to be at Rs 30.80 lakh crore and 47.66 lakh crore, respectively. The tax receipts have been estimated to be Rs 26.02 lakh crore.

Sitharaman said that the scheme of 50-year interest-free loans for capital expenditure to states will be continued this year with a total outlay of Rs 1.3 lakh crore. No change relating to taxation was proposed in the interim budget. The same rates for direct taxes and indirect taxes, including import duties, were retained. However, to provide continuity in taxation, certain tax benefits to start-ups and investments made by sovereign wealth or pension funds have been extended by one year up to March 31, 2025. She also said that outstanding direct tax demands up to Rs 25,000 for the period up to FY2009-10 and up to Rs 10,000 for FY 2010-11 to 2014-15, would be withdrawn. 

The fiscal deficit in 2024-25 is estimated to be 5.1% of GDP, adhering to that fiscal consolidation path.

Push For Renewable Energy 

There was a major push for going “green” with Sitharaman saying that the government aimed for India to reach “net-zero” by 2070. 

Aside from the rooftop solar scheme or the Pradhanmantri Suryoday Yojana launched by the government last week, it also plans on providing viability gap funding to harness offshore wind energy. 

The solar energy scheme, Sitharaman said, will provide 300 units of free electricity to one crore households. 

The government also plans to provide monetary assistance for biomass aggregation machinery. 

Adoption of EVs 

The year 2023 saw many Indians adopting electric vehicles (EVs) across the board from two-wheelers to four-wheelers. However, charging remained a pain point. The government plans to use the rooftop energy scheme for this purpose. 

The government will support the manufacturing of EVs and also the expanse of infrastructure. “Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism,” Sitharaman said. 

The Core has reported extensively about how charging EVs has been a pain point among owners because of the lack of lagging charging infrastructure. 

Aviation

Sitharaman said that India’s aviation industry has grown significantly over the past decade. She said that the number of airports has risen to 149, showcasing the sector's remarkable progress. Additionally, she said she was committed to the ongoing expansion of existing airports and the development of new ones.

She said that the implementation of the Udaan scheme has been a success, facilitating air connectivity to tier-2 and tier-3 cities. Indian carriers have proactively placed orders for more than 1,000 new aircraft, which was a sign of their confidence in the industry's prospects.

Railways

The finance minister announced that three significant economic railway corridor programmes will be executed by Indian Railways. These would include energy, mineral, and cement corridors, port connectivity corridors, and high-traffic density corridors. Additionally, the 40,000 regular rail bogies will be converted to meet the Vande Bharat standards to improve the safety, convenience, and comfort of passengers.

Tourism

Sitharaman said that states will be encouraged to take up the development of iconic tourist centres to brand and market them on a global scale. She announced that long-term interest-free loans will be provided to states for financing such development on a matching basis. To promote the comprehensive development of the centres, Sitharaman said that a framework for a rating of these centres based on the quality of facilities and services will be established. 

Sitharaman said that India’s middle class now aspires to travel and explore, which gives domestic tourism opportunities for local entrepreneurship. To enhance domestic tourism,  projects for port connectivity, tourism infrastructure, and amenities will be taken up in India’s islands, including Lakshadweep, which would also help in generating employment.

Agriculture

Sitharaman said that the government was committed to stepping up value addition in the agricultural sector to increase farmers’ income. She said that she would further promote private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing, and marketing and branding to ensure faster growth of the agriculture and food processing sector. 

She said that a strategy will be formulated to achieve self-reliance for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower. This would cover research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance.

Housing

The government, under the PM Awas Yojana (Grameen), plans to build 2 crore more homes in the next five years “to meet the requirement arising from an increase in the number of families”.  

For the middle class living in rented homes, chawls, slums, and unauthorised colonies, the government plans a new scheme to ensure they can buy or build their own homes. 

Women And Children 

While vaccination programmes against the human papillomavirus (HPV) that causes cervical cancer are already in place in several parts of India, the government plans to encourage vaccination for girls in the age group of 9 to 14 years. 

Sitharaman said that new schemes for maternal and child care will also be introduced.  “Upgradation of anganwadi centres under “Saksham Anganwadi and Poshan 2.0” will be expedited for improved nutrition delivery, early childhood care, and development,” Sitharaman said. 

The finance minister announced that the target for turning women economically self-reliant through self-help groups (SHGs) was being increased to three crore from the present two crore. She said that as many as one crore women were assisted to become ‘lakhpati didi’ through SHGs. “83 lakh SHGs with nine crore women are transforming the rural socio-economic landscape with empowerment and self-reliance,” Sitharaman said. 

She said that their success has made them an inspiration for other women. In recognition of their achievements, the target for lakhpati didi was being enhanced.