Updated Today! – Interim Budget 2024 Explained – 50 Key Highlights – UPSC Mains Questions on Interim Budget 2024
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Introduction to Interim Budget 2024 UPSC
On First of February 2024, Indian Government is going to Present Interim Budget 2024. We can Understand it in this way that, 5 Year term of Modi Government is Going to Complete, and new elections is about to happened.
This time period is generally known as Temporary Budget Time Period. If you are preparing for Major Competitive Examinations, and wants to know about “What is Interim Budget?”, “Why Interim Budget will presented in Parliament?” or many other questions related to Interim Budget UPSC, then, in this blog, we will answer your this question and will inform you with In&Out with Interim Budget 2024 UPSC.
So, let’s start-
Read Also | Complete Details About Model Code of Conduct
What is an Interim Budget? – Why Interim Budget is in news? – Interim Budget UPSC
An Interim Budget is a financial statement presented by the government during a transitional period, typically when a new government is about to take office.
It serves as a temporary budget to meet the financial needs of the country until a full-fledged budget is introduced.
The primary purpose of an Interim Budget is to ensure the continuity of essential government functions and expenditures, allowing for the smooth functioning of public services.
During this interim period, the outgoing government presents estimates of both expenditure and receipts. However, major policy decisions and long-term financial planning are generally deferred to the next government’s full budget.
Let’s Understand Interim Budget with a Real Life Example
Imagine you’re in charge of planning a family vacation, and you’re handing over the planning responsibilities to your friend before you go on a short trip. You don’t want the vacation to come to a standstill while you’re away, so you give your friend an interim plan.
In this “Interim Vacation Plan,” your friend has a limited budget and is instructed to cover essential expenses like accommodation, food, and transportation.
Similarly, in the context of a country’s budget, when a new government is about to take over, the existing government presents an Interim Budget. It’s like a temporary financial plan that ensures basic needs are met until the new government can create a more comprehensive and long-term budget.
The Interim Budget keeps the country running smoothly during the transition, just like your interim vacation plan keeps the family vacation on track while you’re away.
Does the Indian Government Presents 5-Year Budget at once?
No, the Government of India does not present a budget for five years at once. In India, the government presents an annual budget, which outlines its financial plans and allocations for the upcoming fiscal year. The fiscal year in India runs from April 1st to March 31st of the following year.
The annual budget includes details of government revenue, expenditures, taxation policies, and allocation of funds to various sectors such as education, healthcare, infrastructure, defense, and agriculture. It is presented by the Finance Minister in the Parliament, typically in February.
While the government may have long-term plans and policies outlined in documents like Five-Year Plans (which were discontinued in 2017), the budget itself is presented annually, allowing for adjustments and revisions based on changing economic conditions and government priorities.
Ok, But why do we need it anyhow, Don’t we have a complete year budget?
An Interim Budget is crucial during the transition between governments in India, ensuring continuity in public services and preventing a financial vacuum. Presented annually, it covers essential expenditures until a new government introduces a full-fledged budget.
The Interim Budget is a legal necessity to obtain parliamentary approval for spending during the interim period. It addresses urgent financial needs, maintains economic stability, and facilitates a smooth transition between the outgoing and incoming governments.
Is it necessary for the Indian Government to present an Interim Budget, even after unveiling an Annual Budget and receiving funds from the Consolidated Fund of India, to ensure a smooth transition during changes in government?
Yes. Even though the government has an annual budget, the Interim Budget becomes essential when there’s a change in leadership. It ensures a smooth transition by providing a temporary financial plan between the outgoing and incoming governments.
This budget is crucial for legal reasons, as parliamentary approval is needed for government spending. The Interim Budget bridges the gap between the end of one fiscal year and the presentation of a new government’s full budget. It guarantees the continuation of essential services, prevents financial disruptions, and covers urgent expenditures like ongoing projects and employee salaries.
In essence, the Interim Budget acts as a financial bridge, maintaining stability during the interim period until the new government formulates and presents its comprehensive budget aligned with its policy priorities. While the annual budget outlines the government’s overall financial plan for the year, the Interim Budget is a specific and temporary measure to ensure the smooth functioning of the government during transitional phases.
Within what timeframe does the Interim Budget operate?
The Interim Budget in India typically covers the interim period between the end of one fiscal year and the presentation of a new government’s full-fledged budget. This interim period arises during transitional phases, such as changes in government due to elections.
The Interim Budget serves as a temporary financial plan during this period, ensuring the continuity of essential government functions and services until the new government can present its comprehensive budget.
The duration of this interim phase can vary but is generally the period between the end of one fiscal year and the formation of the new government, which can take a few weeks or months.
Does this mean that the Annual Budget is presented only four times within a span of five years, as during the first year, the country operates on an Interim Budget?
Exactly… that right. Now you got it clearly. In a government’s five-year term, the Annual Budget is typically presented each fiscal year.
However, during the first year of a new government’s term, there might be an Interim Budget presented during the transitional period. Therefore, in the span of five years, there would be a total of four Annual Budgets, and one Interim Budget presented during the initial transitional year.
Purpose & Significance of Interim Budgets – Why the Interim Budget Presented?
Interim Budgets mainly serves one key purpose and that is, it allows the continuity in working of Government and their offices during government transition period. However, there are many more reasons it serves which we have added below-
- Continuity of Governance: Interim Budgets ensure the uninterrupted functioning of the government during transitional phases, such as changes in leadership due to elections.
- Essential Expenditures: They cover necessary expenditures, including salaries, ongoing projects, and day-to-day operations, preventing financial disruptions.
- Legal Mandate: Interim Budgets fulfill the legal requirement for parliamentary approval of government spending during the interim period.
- Smooth Transition: They facilitate a smooth transition between the outgoing and incoming governments by providing a temporary financial plan.
- Avoidance of Financial Vacuum: Interim Budgets prevent a financial vacuum, maintaining economic stability during the transitional period.
- Short-Term Planning: While Annual Budgets outline long-term fiscal plans, Interim Budgets focus on short-term financial necessities.
- Public Services Continuity: Interim Budgets ensure the continuity of essential public services, benefiting citizens during government transitions.
- Bridge to the Full Budget: They serve as a financial bridge until the new government can present a comprehensive budget aligned with its policies.
- Urgent Expenditure Coverage: They address urgent financial needs and unforeseen expenditures that cannot wait for a full-fledged budget.
- Temporary Fiscal Plan: Interim Budgets act as a temporary fiscal plan, meeting immediate financial requirements until the government’s full budget is introduced.
Key Features of Interim Budget
The Interim Budget in India possesses several key features that distinguish it from the regular budget. Here are the main features:
1. Temporary Nature
The Interim Budget is a temporary financial arrangement, presented during transitional phases or changes in government.
2. Short-Term Focus
It primarily addresses short-term financial needs, ensuring the continuity of government operations until a comprehensive budget is presented.
3. Essential Expenditures
It covers essential expenditures to maintain the functioning of the government, avoiding major policy decisions and long-term commitments.
4. No New Taxes or Schemes
Typically, the Interim Budget refrains from introducing new taxes or major policy initiatives, as those are reserved for the regular budget.
5. No Full Fiscal Year Planning
Unlike the regular budget, the Interim Budget does not plan for the entire fiscal year but addresses financial requirements during the interim period.
6. Parliamentary Approval
The Finance Minister presents the Interim Budget to Parliament for approval, and it undergoes debates and scrutiny similar to the regular budget.
7. Legal Basis
While not explicitly mentioned in the Constitution, the Interim Budget is a recognized practice and is part of India’s budgetary process.
8. Bridge to the Full Budget
It acts as a financial bridge, ensuring the government’s functioning until a new government can present a comprehensive budget.
9. Continuity of Public Services
One of its primary aims is to prevent disruptions in public services, maintaining stability during transitional phases.
10. Economic Outlook Snapshot
It provides a snapshot of the economic outlook during the transitional phase, outlining the fiscal situation for the interim period.
11. Approval for Withdrawals
It seeks parliamentary approval for withdrawing funds from the Consolidated Fund of India to cover expenses.
12. Focus on Stability
The Interim Budget emphasizes financial stability and continuity, ensuring that ongoing projects and services are not adversely affected.
13. Government Accountability
The government remains accountable for financial management and expenditures during the interim period.
14. Pre-election Measures
In election years, Interim Budgets might include populist measures to influence public opinion without committing the incoming government.
Why Interim Budget is Special?
There are many reasons why Interim Budget is Special and crucial at a time. We have listed those reasons below-
- Transitional Phase: It is presented during transitional periods, ensuring the continuity of government functions between changes in leadership, typically due to elections.
- Temporary Financial Plan: It acts as a temporary financial plan, covering essential expenditures until a new government presents its full-fledged budget.
- Legal Requirement: The Interim Budget fulfills the legal necessity of obtaining parliamentary approval for government spending during the interim period.
- Prevents Disruptions: By covering urgent expenditures, salaries, and ongoing projects, it prevents financial disruptions and maintains the smooth operation of government services.
- Facilitates Smooth Transition: It contributes to a seamless transition between outgoing and incoming governments, avoiding gaps in financial planning.
- Short-Term Focus: While Annual Budgets outline long-term fiscal policies, Interim Budgets focus on short-term financial necessities, reflecting the immediate needs of the government.
- Public Services Continuity: Ensuring the continuity of essential public services, it directly benefits citizens during periods of government change.
- Economic Stability: The Interim Budget helps maintain economic stability by avoiding financial uncertainties during transitional phases.
- Bridge to Full Budget: It serves as a bridge, covering the financial gap until the new government can introduce its comprehensive budget aligned with its policies and priorities.
- Addresses Urgent Needs: The Interim Budget addresses urgent financial needs and unforeseen expenditures, ensuring that critical expenses are met without delay.
What is Role of Interim Budget?
The role of the Interim Budget in India is crucial during transitional periods, especially when there is a change in government, often due to elections. Its primary functions and significance can be outlined as follows:
1. Financial Continuity
The Interim Budget ensures the uninterrupted functioning of the government during the transition between the outgoing and incoming governments.
2. Essential Expenditure Coverage
It covers essential expenditures, including ongoing projects, salaries, and daily operations, preventing financial disruptions.
3. Legal Mandate
The Interim Budget fulfills the legal requirement for obtaining parliamentary approval of government spending during the interim period.
4. Temporary Financial Plan
Serving as a temporary financial plan, it addresses immediate financial needs until the new government presents a comprehensive budget.
5. Bridge to Full Budget
It acts as a financial bridge, preventing gaps in financial planning until the new government introduces its full-fledged budget.
6. Short-Term Focus
While Annual Budgets outline long-term fiscal policies, Interim Budgets focus on short-term financial necessities, reflecting the immediate needs of the government.
7. Public Services Continuity
By ensuring the continuity of essential public services, the Interim Budget directly benefits citizens during periods of government change.
8. Economic Stability
It contributes to maintaining economic stability by preventing financial uncertainties and ensuring a smooth transition between governments.
9. Addressing Urgent Needs
The Interim Budget addresses urgent financial needs and unforeseen expenditures, allowing the government to meet critical expenses promptly.
10. Facilitating Smooth Transition
Overall, the Interim Budget plays a crucial role in facilitating a smooth transition between outgoing and incoming governments, ensuring financial stability and continuity of essential services.
Role of Finance Minister in Presenting Interim Budget
The role of the Finance Minister in presenting the Interim Budget is significant and involves several key responsibilities:
- Budget Presentation: The Finance Minister is responsible for presenting the Interim Budget in the Parliament, outlining the government’s financial plan for the interim period.
- Policy Statement: The Finance Minister uses the Interim Budget presentation as an opportunity to make a policy statement, addressing the economic condition of the country and presenting the government’s fiscal priorities.
- Expenditure and Revenue Estimates: The Finance Minister provides estimates of both government expenditures and revenues during the interim period, offering insights into the financial health of the nation.
- Allocation of Funds: Decisions regarding the allocation of funds to various sectors, projects, and programs are made by the Finance Minister in consultation with relevant ministries.
- Economic Outlook: The Finance Minister discusses the economic outlook of the country, highlighting key achievements and challenges, as well as the government’s strategy for addressing them during the interim phase.
- Policy Adjustments: While major policy decisions are usually reserved for the full-fledged budget, the Finance Minister may introduce minor policy adjustments or initiatives deemed necessary during the interim period.
- Parliamentary Approval: The Finance Minister seeks parliamentary approval for the government’s proposed expenditures during the interim period, ensuring compliance with legal requirements.
- Communication with the Public: The Finance Minister communicates the government’s financial plans and strategies to the public, addressing concerns and providing clarity on economic policies during the interim phase.
- Coordination with Ministries: The Finance Minister collaborates with various ministries to understand their financial needs and ensures that the Interim Budget reflects the government’s overall priorities.
- Transition Planning: In the context of a change in government, the Finance Minister plays a key role in facilitating a smooth transition of fiscal responsibilities to the incoming government.
What Indian Constitution Says about Interim Budget – Provisions Under Indian Constitution Related to Interim Budget
The Indian Constitution doesn’t actually mention the term “Interim Budget” or provide specific provisions related to it. The Constitution primarily outlines the broader framework for the presentation of budgets in Articles 112 to 116.
Here are relevant provisions related to budget presentation in the Indian Constitution:
1. Article 112
This article deals with the presentation of the Annual Financial Statement (budget) by the President. It mentions that the President shall in respect of every financial year cause to be laid before both Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year.
2. Article 113
This article outlines the form in which the Annual Financial Statement is to be laid before the Parliament. It specifies that it shall distinguish estimates for expenditure on revenue account from other expenditures and shall show separately the expenditure charged upon the Consolidated Fund of India.
3. Article 114
This article deals with the procedure in the Parliament regarding the Annual Financial Statement. It mentions that no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law and authorized by the Annual Financial Statement.
When Interim Budget first presented in Indian Parliament?
The tradition of presenting an Interim Budget in India dates back several decades. The first recorded instance of an Interim Budget being presented in the Indian Parliament was in 1948. This practice has continued over the years during transitional phases, typically when there is a change in government due to elections.
The Interim Budget serves as a temporary financial plan to ensure the continuity of essential government functions and services until a new government can present a comprehensive and full-fledged budget aligned with its policies and priorities. The specific date of the first Interim Budget presentation may vary, as it depends on the timing of elections and changes in government.
Criticism of Interim Budget
While Interim Budgets serve specific purposes during transitional phases, they are not without criticism. Some common criticisms include:
- Lack of Comprehensive Planning: Interim Budgets are often seen as short-term solutions, lacking the comprehensive planning and policy announcements that a full-fledged budget provides.
- Limited Fiscal Policy Changes: Major fiscal policy changes are typically deferred to the full budget, limiting the scope for significant economic reforms or adjustments during the interim period.
- Potential for Populism: Critics argue that governments may use Interim Budgets for populist measures to gain political favor, as they may not face the full consequences during their term.
- Uncertainty for Stakeholders: Businesses and citizens may face uncertainty as they await the full budget for clarity on long-term policies and initiatives.
- Reduced Transparency: The temporary nature of Interim Budgets may lead to reduced transparency in fiscal planning and expenditures, compared to the detailed information provided in an Annual Budget.
- Risk of Short-Term Focus: Governments might prioritize short-term gains during the interim period, potentially neglecting necessary long-term investments and reforms.
- Potential for Incomplete Allocations: Due to the interim nature, allocations made in an Interim Budget may be incomplete or may not fully address the financial needs of certain sectors.
- Limited Scope for New Projects: The interim period may limit the initiation of new projects or the allocation of funds for long-term initiatives, as these are often deferred to the full budget.
- Impact on Investors: Investors may hesitate due to the uncertainty created by interim budgets, affecting investment decisions and economic growth.
- Criticism of Timing: Some critics argue that the timing of elections and the presentation of Interim Budgets may be influenced for political advantages, potentially undermining the economic principles of sound fiscal management.
Why We Need Interim Budget?
Interim Budgets are crucial during government transitions, ensuring the continuity of essential services. Presented in the interim period between changes in government, they fulfill legal requirements, cover urgent expenditures, and prevent disruptions. The Interim Budget acts as a temporary financial bridge until a new government presents a comprehensive budget.
Is Interim Budget a Scam?
No, the Interim Budget is not a scam. It is a legal and constitutional practice in India designed to ensure the continuity of government functions during transitional periods, particularly when there is a change in leadership. The Interim Budget serves as a temporary financial plan until a new government can present a full-fledged budget.
What is Vote On Account / Vote – On – Account?
A “Vote on Account” is like giving temporary permission for the government to use some money for a short time, usually two months. This happens when there’s a change in government or during election time. It’s a way to keep things running until they can plan and get approval for the full budget. It’s a bit like getting a small amount of money to cover immediate needs until they sort out the bigger financial plan.
How Interim Budget is Different from Vote on Account? – Interim Budget Vs Vote On Account
There are many differences between Interim Budget & Vote On Account. We have listed all of them below-
Aspect | Interim Budget | Vote on Account |
Timing | Typically presented during transitional phases, often when there is a change in government or the present government’s term is about to end. | Presented when government need immediate money & there is delay in Interim or Full budget. Then for the period of next two months, Government can use that fund. |
Duration | Covers a more extended period, usually until the new government presents a comprehensive budget. | Short-term measure, providing funds for immediate needs until the full/interim budget is approved. |
Scope | Can include major policy decisions, new projects, and comprehensive fiscal planning. | Limited to essential expenditures and doesn’t include major policy decisions. |
Legal Basis | No specific legal term; it’s a practice evolved over time and is not explicitly mentioned in the Constitution. | A formal provision under Article 116 of the Indian Constitution, allowing for a specific amount for a short period. |
Government Transition | Often presented during the transition between outgoing and incoming governments. | Presented in election years or during political transitions, allowing the government to function until the full budget is approved. |
Frequency | Typically presented once a five year during transitional phases. | Can be presented more frequently, especially in election years or under special circumstances. |
Approval Process | Requires parliamentary approval for comprehensive financial planning. | Seeks Parliament’s approval for a specific amount to cover immediate needs until the full budget is approved. |
Difference between Interim Budget & Regular Budget – Difference Between Interim Budget and Annual Budget – Interim Budget Vs Full Budget – Interim Budget Vs Union Budget
We have enlisted all the major differences between Regular Budget and Interim Budget below-
Aspect | Interim Budget | Regular (Full) Budget |
Timing | Presented during transitional phases or change in government, often before elections. | Presented annually, typically in February, outlining financial plans for the entire fiscal year. |
Duration | Covers a specific period until a new government can present a comprehensive budget. | Encompasses the entire fiscal year, providing a comprehensive financial plan. |
Scope | Primarily addresses urgent and essential expenditures, avoiding major policy decisions. | Comprehensive and includes major policy decisions, long-term planning, and new initiatives. |
Legal Basis | Not explicitly mentioned in the Constitution; it’s a practice evolved over time. | Governed by constitutional provisions, including Articles 112 to 116, outlining the budgetary process. |
Government Transition | Presented during transitional phases, often when there is a change in government. | Not necessarily tied to government transition; presented annually to outline the government’s financial plans. |
Frequency | Typically presented once during transitional phases or change in government. | Presented annually. |
Approval Process | Requires parliamentary approval for a temporary financial plan during transitional phases. | Requires parliamentary approval for the government’s comprehensive financial plan for the entire fiscal year. |
Policy Changes | Generally avoids major policy decisions and focuses on maintaining essential services. | Includes major policy decisions, new initiatives, and long-term planning. |
Economic Outlook | Provides a snapshot of the economic situation during the transitional phase. | Offers a comprehensive outlook for the entire fiscal year, including economic projections and targets. |
Allocation of Funds | Allocations may be temporary and based on maintaining continuity rather than long-term planning. | Allocations are detailed and cover the entire fiscal year, reflecting the government’s priorities. |
Public Services | Focuses on continuity, ensuring that essential services are not disrupted during transitions. | Encompasses a broader range of services and sectors, addressing long-term development goals. |
Urgent Expenditures | Addresses immediate financial needs until a full-fledged budget is presented. | Covers both immediate and long-term financial needs of the government. |
Short-Term Focus | Primarily focused on short-term financial necessities. | Balances short-term needs with long-term planning and development. |
Presentation Date | Typically presented before the start of the fiscal year. | Presented annually, with the budget year starting on April 1st. |
Approval Timeline | Approval may be expedited to ensure continuity during transitions. | Follows the regular budgetary approval process, allowing for detailed scrutiny and debates. |
Public Expectations | Usually, public expectations are limited, given its temporary nature. | Public expectations are higher, as the full budget outlines the government’s vision for the entire fiscal year. |
Investor Confidence | May have limited impact on investor confidence due to its interim nature. | Affects investor confidence significantly, as it outlines the government’s comprehensive financial plans and policies. |
Long-Term Planning | Generally lacks detailed long-term planning, as it serves as a bridge to the full budget. | Includes detailed long-term planning, addressing the government’s vision and strategy for economic development. |
Government Accountability | Provides a temporary financial plan and maintains continuity. | Holds the government accountable for its overall financial management and policy decisions. |
Process of Presenting Interim Budget Vs Vote on Account
The process of presenting an Interim Budget and a Vote on Account in India involves distinct steps and serves different purposes within the broader framework of budgetary procedures.
Process of Presenting Interim Budget:
Government Assessment
The government evaluates the need for an Interim Budget, typically during transitional phases, such as the end of a term or elections.
Finance Ministry Preparation
The Finance Ministry, led by the Finance Minister, prepares a temporary financial plan to cover essential expenditures until a new government can present a comprehensive budget.
Cabinet Approval
The proposed Interim Budget is presented to the Cabinet for approval. Cabinet discussions and decisions shape the key aspects of the Interim Budget.
Parliamentary Presentation
The Finance Minister presents the Interim Budget in Parliament, outlining estimates of both government expenditures and revenues for the interim period.
Debates and Approval
The Interim Budget undergoes parliamentary debates, scrutiny, and approval. It requires the consent of Parliament to become effective.
Implementation
Once approved, the government implements the Interim Budget, ensuring the continuity of essential services and financial operations during the transitional phase.
Process of Presenting Vote on Account:
Need Identification
The government identifies a need for immediate funds, often due to delays in approving the full budget or when there is uncertainty in the budgetary process.
Finance Ministry Proposal
The Finance Ministry proposes a Vote on Account, seeking parliamentary approval to withdraw a specific amount from the Consolidated Fund of India for a short duration, usually two months.
Cabinet Approval
The Cabinet reviews and approves the proposed Vote on Account, specifying the amount and the purpose for which the funds will be utilized.
Parliamentary Presentation
The Finance Minister presents the Vote on Account to Parliament, seeking approval to withdraw funds to cover immediate and essential expenditures.
Debates and Approval
Parliament engages in discussions and debates on the Vote on Account, leading to a formal approval process. It is essential for ensuring the government’s short-term financial needs are met.
Limited Duration
The Vote on Account is valid for a specific period, often two months, providing temporary relief until the full budget is approved.
Key Differences:
Duration
- The Interim Budget covers a more extended period until a comprehensive budget is presented.
- The Vote on Account is a short-term measure, covering immediate financial needs for a limited duration.
Scope
- The Interim Budget may include major policy decisions and a broader financial outlook.
- The Vote on Account focuses on essential expenditures and does not involve major policy changes.
Legal Basis
- The Interim Budget is not explicitly mentioned in the Constitution but is a recognized practice.
- The Vote on Account is a formal provision under Article 116 of the Indian Constitution.
Interim Budget 2024 Expectations
We have added a complete sections of 2024 Budget Expectations. Hope you like it:
1. Nominal GDP Growth Expectations
- Street anticipates FY25 nominal GDP growth at 10%-11.5%.
- India’s nominal GDP expected to grow by 8.9% this year to Rs 296.58 lakh crore.
- Brokerages estimate growth between 10% and 11.5% for 2024-25.
- Centre reduces fiscal deficit to an expected 5.9% of GDP this year.
2. Tax Changes Suggested by CII
- CII recommends increasing the tax exemption limit for individuals.
- Suggestion to review capital gains tax structure for consistency.
3. Industry Lobby’s Call for Boost in Manufacturing
- Extend concessional tax regime for new manufacturing facilities.
- Expand Production Linked Incentive to labor-intensive sectors.
4. Investment Expectations of CII Lobby
- Continue spending on infrastructure; increase by at least 20% to 12 trillion INR.
- Extend support to states with interest-free 50-year loans; increase allocation by 23% to 1.6 trillion INR.
5. Steel Industry Expectations
- Expect government focus on infrastructure spending and domestic manufacturing.
- Measures to check rising steel imports crucial for industry profitability.
6. Bond Market Monitoring Points
- Monitor expected slippage in FY24.
- Government’s fiscal deficit target for FY25.
- Expected net market borrowings for FY25 and impact on 10Y yields.
7. FinMin’s Overview of Indian Economy
- Focus on raising private sector investments.
- Positive trends include housing price recovery and improved gender-related indicators.
- Emphasis on institutional architecture for macro stability.
- External debt considered comfortable and prudently managed.
8. R&D Spend Enhancement
- Call to gradually enhance R&D spending to 2.5% of GDP.
- Emphasize creating regulatory certainty for increased overseas investment.
9. Expectations of Emerging Industries
- Concessional tax regime for companies investing in green technologies.
- EV industry expects continuity of FAME II subsidy for ambitious EV targets.
- Lower GST rate on lithium-ion batteries from 18% to 5% desired.
- Extension of PLI to battery and electric power manufacturing.
- Call for measures to develop a semiconductor ecosystem.
- Simplified regulations and incentives for fintech and startups.
10. Agricultural Machinery and Exports
- Advocate for reducing duty on input raw materials for agricultural machinery.
- Aim to make agricultural equipment more affordable for farmers and promote global exports.
11. Real Estate Industry’s Anticipations
- Housing sector seeks an increase in the interest rate deduction cap to Rs 5 lakhs.
- Desire for redefinition of affordable housing in metropolitan cities and tax benefits for first-time homeowners.
12. Pharmaceutical Sector Needs Government Support
- Call for increased government support in the pharmaceutical sector.
- Emphasis on developing new industrial economic zones in Tier 2 and 3 cities.
13. Budget Session of Parliament Details
- Budget Session begins on Jan 31; last session of the present Lok Sabha.
- Interim Budget presentation on Feb 1, preceding Lok Sabha elections in April-May.
14. Government’s Welfare Priorities
- Government policies to prioritize youth, women, farmers, and the poor.
- Rationalizing income tax slabs for increased disposable income and higher consumption.
- Suggestions include increased basic exemption, standard deduction, and higher limits for 80C.
15. Economists’ View on Budget Balance
- Expectation for the budget to balance populist measures and fiscal prudence.
- Challenging task due to potential increase in infrastructure, agriculture, and rural sector allocations.
- Focus recommended on manufacturing, emerging sectors, and research and development.
16. Sugar Industry’s Expectations
- Indian Sugar Mills Association (ISMA) requests additional sugar diversion for ethanol production.
- Request for upward revision in procurement prices of ethanol from various sources.
- Demand to raise the MSP of sugar to Rs 38 per kg.
17. Expectations from UP Government
- Calls for further reduction in property tax and electricity bills from the UP government.
- Anticipated benefits for tourism, hotels, and other industries.
18. R&D Provision for MSMEs
- Proposal for a special provision in the budget for R&D to uplift MSMEs and startups.
- Emphasis on direct participation of MSMEs in R&D processes for rapid progress.
19. Measures to Boost Consumption Demand
- Expectations for measures in the Interim Budget to boost consumption demand and support the agri economy.
- Suggestion to put more money in people’s hands, possibly through tax reduction or increased standard deduction.
20. Healthcare Spending and Ayushman Bharat
- Anticipation of increased healthcare spending, particularly on insurance and Ayushman Bharat.
- Continuing focus on healthcare sector initiatives in the upcoming budget.
21. GDP Expectations
- Economists predict a target of approximately 5.3 percent of GDP for the 2024-25 fiscal year in the upcoming interim budget.
22. MSME Sector Priorities
- MSME sector emphasizes financial inclusion and ease of doing business.
- Measures like simplified regulatory procedures and reduced compliance burdens sought.
- Calls for incentivized lending rates, credit guarantee schemes, and increased funding channels.
23. Edtech Firms’ Expectations
- Edtech firms hopeful for tax incentives in the interim budget.
- Suggests a decrease in GST rates on digital educational content for affordability.
24. Startups’ Wishlist
- Startups viewed as the sunrise sector; calls for easy financing and collaboration.
- Anticipates a focus on simplifying the ease of doing business and resolving bottlenecks.
25. Tea Industry’s Hopes for Self-Sustainability
- Tea industry expects support for self-sustainability.
- Proposals include government takeover of social costs and emphasis on exports.
26. MSME Sector Anticipates Growth
- MSME sector anticipates enhanced Production Link Incentives (PLI) and increased investment scope.
- Focus on spiritual destinations expected to boost tourism industry.
27. Healthcare Sector’s Requests
- Indian Medical Association (IMA) calls for a reevaluation of the health mission strategy.
- Advocates for direct funding to government public hospitals to address healthcare challenges.
28. Concerns About Steel Imports
- JSW Steel Joint MD expresses caution as steel imports are increasing.
- Economic growth highlighted as a primary driver for steel consumption in India.
29. Potential Hike in Securities Transaction Tax (STT)
- Speculation about a potential hike in STT during the interim budget.
- SEBI’s reminder about the risks in F&O trading and the impact of STT on volumes.
30. Enhanced Subsidies Under PM Suryoday Yojna
- Interim budget likely to offer enhanced subsidies under PM Suryoday Yojna.
- Focus on rooftop solar scheme for households.
31. Momentum in Power Sector
- Power sector expected to gain momentum, especially in renewable energy.
- Attention on Pradhanmantri Suryodaya Yojana and incentives for green initiatives anticipated.
32. Auto Industry’s Expectations
- Continuation of favorable policies for promoting green mobility and infrastructure development.
- Aspiration for rationalized duty structure and GST, stability in policies, and increased investment.
33. Telecom Industry’s Urges
- Telecom industry urges a favorable tax regime, reduction in license fees, and more supportive measures.
- Proposals include abolishing the USOF levy and reducing license fees.
34. IIP Figures for Fiscal 2023
- IIP data shows strong growth in capital goods and infrastructure/construction goods indices.
- Indices maintain momentum into fiscal 2024, recording cumulative growth rates.
35. Capex Trends Since Fiscal 2015
- Public sector capital expenditure has significantly risen from FY15 to FY24.
- Increase in capital expenditure, grants to states, and resources of public sector enterprises.
36. CII’s Wishlist
- CII urges timely implementation to lower logistics costs and prioritizing high-interest public sector enterprises.
- Proposals include extending tax rates for manufacturing units and expanding PLI scheme to labor-intensive sectors.
37. Space Tech Industry’s Appeals
- Space tech industry urges GST exemption expansion to satellites, launch vehicles, and ground equipment.
- Calls for tax holidays and exemptions for space sector firms, and relaxation of custom duties.
38. Space Tech Industry’s Appeals
- Space tech industry urges GST exemption expansion to satellites, launch vehicles, and ground equipment.
- Indian Space Association (ISpA) seeks tax holidays and exemptions for space sector firms.
- CEO of Bengaluru-based startup Digantara, Anirudh Sharma, calls for relaxation of custom duties.
39. Schools’ Expectations Amid NEP Overhaul
- Schools expect resource backing amid National Education Policy (NEP) overhaul.
- Requests include the establishment of a subject matter expert committee for teachers and specific resource allocation for cultural change.
- Focus on quality control emphasized in light of NEP 2020 changes.
40. Fintech Sector’s Wishlist
- BankBazaar.com report suggests including more documents in DigiLocker for convenient access.
- Proposals include parity in taxation of listed & unlisted equities for fairness.
41. Agriculture Sector’s Hopes After El Nino Troubles
- Agriculture sector resilient during the pandemic but faces challenges in 2023-24.
- Growth rate estimated to be at an eight-year low of 1.8%.
42. Govt Capex Growth Projection for FY25
- Government’s capital expenditure growth likely to slow down to 10% in FY25.
- Interim budget may allocate around Rs 11 lakh crore for capital expenditure.
43. Pre-Budget Trading: Do’s and Dont’s
- Traders urged to be cautious due to recent volatility.
- List of do’s and don’ts provided for traders.
44. Auto Sector Projections
- Automobile sector anticipates focus on last-mile connectivity, infrastructure, and policy consistency.
- SIAM optimistic about existing policies, hopes for support for sustainable technologies.
45. Green Energy Sector Expectations
- Emphasis on expanding distributed renewable energy capacities.
- Expectation for the reintroduction of the Approved List of Models and Manufacturers (ALMM) for competitiveness.
- Possible proposal for viability gap funding for offshore wind projects.
46. Incentives and Tax Relaxations for Green Energy
- Anticipation of financial provision for Pradhan Mantri Suryoday Yojna in the interim budget.
- Expected revelation of enhanced subsidies under the scheme.
47. Key Charts – External Strength
- India’s external position considered a significant strength.
- External debt manageable and easily serviceable.
48. Key Charts – Macroeconomic Vulnerability
- Focus on upholding and enhancing overall economic resilience.
- Creation of a macro-vulnerability index indicating decreased susceptibility.
49. Key Charts – Rising Participation of Women Force
- Increasing the participation of women in the workforce crucial for future economic expansion.
- Positive results noted in the rise of female labor force participation rate.
50. Key Charts – Housing Uptick
- Economic growth significantly relies on the housing sector.
- Noticeable rebound in housing prices post-COVID-19 pandemic.
51. Key Charts – Increasing Investments
- Government emphasizes boosting private sector investments.
- Robust financial positions indicate rising investment and credit growth.
52. Economic Survey Report Ahead of Interim Budget
- Finance ministry releases ‘The Indian Economy: A Review’ ahead of the interim budget.
- Noted as not serving as the official Economic Survey of India.
53. MSME Sector Anticipates Growth
- National Council for MSME ASSOCHAM anticipates bolstering of PLI and expanded investment horizon.
- Emphasis on spiritual destinations for potential tourism industry growth.
54. Maritime Sector Appeals for Comprehensive Policy
- Indian Coastal Conference Shipping Association seeks a thorough financing policy.
- Requests revision of Section 31D in the SARFAESI Act and inclusion of marine gas oil into GST input credit.
55. Tea Industry Awaits Support for Self-Sustainability
- Bharatiya Chai Parishad head envisions self-sustainability for the tea industry.
- Suggests government take responsibility for social costs, advocates for enhanced exports.
56. Prioritizing Private Sector and Preventive Healthcare
- Association of Healthcare Providers urges incentivizing the private sector and prioritizing preventive healthcare.
- Emphasis on collaboration for effective healthcare interventions, especially in rural areas.
57. Healthcare Sector Pushes for Direct Funding to Govt Hospitals
- Indian Medical Association urges reassessment of health mission strategy.
- Calls for direct funding to government public hospitals and an end to health missions.
58. Health Insurance Industry Calls for Lower GST
- Niva Bupa Health Insurance CEO advocates for reducing the 18% GST rate on health insurance.
- Reduction seen as a measure to enhance affordability and expand healthcare coverage.
59. Centre Holds All-Party Meeting Ahead of Interim Budget Session
- Centre schedules an all-party meeting with political leaders ahead of the interim budget session.
- Leaders expected to raise issues, and the government to share its agenda seeking cooperation.
Latest News on Interim Budget 2024 – Interim Budget 2024 Highlights – Interim Budget 2024 Takeaways – Interim Budget 2024 Simpified – What is Interim Budget 2024 UPSC?
Today is First of February 2024, and Interim Budget 2024, has been announced, these are simplified takeaways of entire Interim Budget 2024. Please comment any point if we have missed it.
1. Fiscal Consolidation – Interim Budget 2024 Highlights UPSC
- Fiscal Deficit target for FY25 set at 5.1% of GDP.
- FY24 Fiscal Deficit target revised down to 5.8%.
- Capex target for FY25 increased by 11.1% to ₹11.1 lakh crore.
2. Economic Transformation – Interim Budget 2024 Highlights UPSC
- Finance Minister highlighted positive economic transformation over the last decade.
- Emphasis on the trinity of democracy, demography, and diversity for national development.
- Goal of becoming a developed country by 2047.
3. Taxation – Interim Budget 2024 Highlights UPSC
- No changes in direct and indirect tax rates, including import duties.
- Tax collections doubled over the past decade.
- Average processing time for tax returns reduced to 10 days.
4. Infrastructure Development – Interim Budget 2024 Highlights UPSC
- Capital expenditure outlay increased by 11.1% to ₹11.11 lakh crore.
- Infrastructure focus on logistics, innovation in research, and sustainable growth.
5. Railways – Interim Budget 2024 Highlights UPSC
- Conversion of 40,000 normal rail bogies to Vande Bharat for safety and comfort.
- Introduction of three major railway corridors for economic growth.
6. Lakhpati Didi Scheme – Interim Budget 2024 Highlights UPSC
- Target for Lakhpati Didi increased from 2 crore to 3 crore beneficiaries.
- Empowering rural women through financial support.
7. Electricity – Interim Budget 2024 Highlights UPSC
- Rooftop solarisation to provide 10 million households with up to 300 units of free electricity.
- Savings of ₹15,000-18,000 annually through free solar electricity.
8. Green Energy – Interim Budget 2024 Highlights UPSC
- Viability gap funding for offshore wind energy.
- Setting up coal gasification and liquefaction capacity of 100 MT by 2030.
- Phased mandatory blending of compressed biogas (CBG) in CNG and PNG.
9. Electric Vehicles – Interim Budget 2024 Highlights UPSC
- Expansion and strengthening of the EV ecosystem.
- Encouragement for greater adoption of e-buses in public transport.
10. Tourism – Interim Budget 2024 Highlights UPSC
- Comprehensive development of iconic tourist centers with global branding.
- Rating system based on facility quality, long-term interest-free loans to states.
11. Foreign Direct Investment (FDI) – Interim Budget 2024 Highlights UPSC
- FDI inflow during 2014-23 marked a golden era at $596 billion.
- Negotiations on bilateral investment treaties to encourage sustained foreign investment.
12. Technology – Interim Budget 2024 Highlights UPSC
- ₹1 lakh crore corpus with a fifty-year interest-free loan for research and innovation.
- Launching a scheme for strengthening deep-tech technologies for defense.
13. Social Schemes – Interim Budget 2024 Highlights UPSC
- Ayushman Bharat cover extended to all Anganwadi and Asha workers.
- Comprehensive scheme for maternal and child healthcare.
14. Housing and MSMEs – Interim Budget 2024 Highlights UPSC
- PM Awas Yojana (Grameen) implementation continued, targeting three crore houses.
- Training for MSMEs to compete globally, with a focus on growth and investment.
15. Agriculture and Food Processing – Interim Budget 2024 Highlights UPSC
- Efforts for value addition in the agricultural sector to boost farmers’ income.
- Promotion of private and public investment in post-harvest activities.
16. Fiscal Deficit and Other Numbers – Interim Budget 2024 Highlights UPSC
- FY25 fiscal deficit target at 5.1% of GDP.
- FY25 capital expenditure set at ₹11.1 lakh crore, up 11.1%.
- FY25 gross market borrowing pegged at ₹14.13 lakh crore.
FAQs on Interim Budget – Interim Budget UPSC Questions – Interim Budget 2024 UPSC Questions
Question-1: What is the primary purpose of presenting an Interim Budget?
Answer. The primary purpose of presenting an Interim Budget is to ensure the continuity of government functioning during transitional phases, such as the end of a term or changes in government, by providing a temporary financial plan until a comprehensive budget is presented.
Question-2: What are possible questions on Interim Budget for UPSC CSE Mains Exam?
Answer. Possible questions on Interim Budget for UPSC CSE Mains Exam may include inquiries about its significance, constitutional provisions, historical context, and its role in addressing short-term financial needs.
Question-3: What is the significance of the Interim Budget in the Indian financial system?
Answer. The Interim Budget holds significance in providing financial stability during transitions, ensuring continuity of essential services, and offering a snapshot of the economic outlook for the interim period.
Question-4: Why is it essential to present an Interim Budget during transitional phases?
Answer. Presenting an Interim Budget is essential during transitional phases to avoid disruptions in government operations, maintain financial stability, and provide temporary financial planning until a comprehensive budget is presented.
Question-5: What distinguishes the Interim Budget from the Regular Budget?
Answer. The Interim Budget differs in terms of duration, focus on short-term financial needs, avoidance of major policy decisions, and serving as a temporary bridge until a full-fledged budget is presented.
Question-6: When was the first Interim Budget presented?
Answer. The tradition of presenting the Interim Budget in the Indian Parliament began, and the first Interim Budget was presented during the transitional phase of the country’s early years.
Question-7: Who presented the first-ever Interim Budget in Independent India?
Answer. The first-ever Interim Budget in Independent India was presented by the then Finance Minister, serving as a historical milestone in India’s budgetary practices.
Question-8: Is the Interim Budget governed by specific provisions in the Indian Constitution?
Answer. While not explicitly mentioned in the Constitution, the Interim Budget is a recognized practice and is part of India’s budgetary process.
Question-9: What are the major criticisms often associated with Interim Budgets?
Answer. Major criticisms of Interim Budgets include their temporary nature, limited scope for long-term planning, and the potential use of populist measures during election years.
Question-10: Why do we need an Interim Budget?
Answer. An Interim Budget is needed to ensure the continuity of essential services, financial stability, and government functioning during transitional phases.
Question-11: Is the Interim Budget a scam?
Answer. No, the Interim Budget is a legitimate part of India’s budgetary process, serving as a temporary financial plan during transitional phases.
Question-12: Explain the concept of a Vote on Account in simple terms.
Answer. A Vote on Account is a parliamentary approval that allows the government to withdraw funds for a short period, typically two months, to cover immediate and essential expenditures until the full budget is approved.
Question-13: How does a Vote on Account differ from an Interim Budget?
Answer. A Vote on Account is a shorter-term measure covering immediate financial needs, while an Interim Budget addresses short-term and essential expenditures until a comprehensive budget is presented.
Question-14: What are the key features that differentiate an Interim Budget from a Regular Budget?
Answer. Key features include the temporary nature, short-term focus, avoidance of major policy decisions, and acting as a financial bridge until the presentation of a comprehensive budget.
Question-15: Can the terms “Union Budget” and “Regular Budget” be used interchangeably?
Answer. Yes, the terms “Union Budget” and “Regular Budget” are often used interchangeably, referring to the comprehensive financial plan presented by the central government annually.
Question-16: What is the role of the Finance Minister in presenting the Interim Budget?
Answer. The Finance Minister plays a crucial role in presenting the Interim Budget, outlining financial plans and seeking parliamentary approval for the temporary financial arrangement during transitional phases.
Question-17: When did the tradition of presenting the Interim Budget start in the Indian Parliament?
Answer. The tradition of presenting the Interim Budget started during the early years of Independent India, marking a significant practice in the country’s budgetary system.
Question-18: What are the latest updates or news highlights related to Interim Budget 2024?
Answer. For the latest updates and news highlights related to Interim Budget 2024, one would need to refer to current news sources and official announcements for information on specific fiscal plans and economic outlook.
Question-19: What are the primary reasons for presenting a Regular (Full) Budget annually?
Answer. The primary reasons for presenting a Regular (Full) Budget annually include outlining comprehensive financial plans, addressing long-term policy decisions, and providing a detailed roadmap for the entire fiscal year.
Question-20: Is there any connection between the Interim Budget and the Union Budget?
Answer. Yes, the terms “Interim Budget” and “Union Budget” are often used interchangeably, referring to the comprehensive financial plan presented by the central government annually.
Question-21: How does an Interim Budget address the short-term financial needs of the government?
Answer. An Interim Budget addresses short-term financial needs by providing a temporary financial plan, ensuring the continuity of government operations during transitional phases until a full-fledged budget is presented.
Question-22: In which article of the Indian Constitution are budgetary provisions outlined?
Answer. Budgetary provisions are outlined in Articles 112 to 116 of the Indian Constitution, specifying the process and requirements related to financial matters.
Question-23: What factors might lead to delays in presenting a Full Budget in India?
Answer. Delays in presenting a Full Budget in India may occur due to political uncertainties, changes in government, or other logistical challenges affecting the budgetary process.
Question-24: What challenges might the Finance Minister face in presenting the Interim Budget?
Answer. The Finance Minister might face challenges in balancing short-term financial needs, addressing public expectations, and avoiding major policy decisions while presenting the Interim Budget.
Question-25: How does an Interim Budget address the continuity of public services during transitional phases?
Answer. An Interim Budget addresses the continuity of public services by ensuring the allocation of funds for essential expenditures, preventing disruptions during transitional phases.
Question-26: What role does the Interim Budget play in facilitating a smooth transition between governments?
Answer. The Interim Budget acts as a financial bridge, providing stability and continuity between governments during transitional phases until a new government can present a comprehensive budget.
Question-27: How much time does it take to extract money from the Consolidated Funds of India?
Answer. The process of extracting money from the Consolidated Funds of India involves parliamentary approval and can take a certain amount of time, depending on the urgency and procedural requirements.
Question-28: Can the government use a Vote on Account if there is a delay in presenting the Interim Budget?
Answer. Yes, in case of a delay in presenting the Interim Budget, the government can use a Vote on Account to secure funds for immediate and essential expenditures until the comprehensive budget is approved.
Question-29: Can an Interim Budget be presented in a non-election year or without a change in government?
Answer. Yes, an Interim Budget can be presented in a non-election year or without a change in government if there are transitional phases or uncertainties requiring a temporary financial plan.
Question-30: What are the key differences between the Interim Budget and the Union Budget?
Answer. Key differences include duration, focus, scope, and the extent of financial planning, with the Interim Budget serving as a temporary arrangement during transitional phases.
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