Unveiling the Budget 2024: Key Takeaways
Budget Day is considered one of the important days for many stakeholders, including the Individuals, Businesses, Markets, and what not! Today, i.e., 1 Feb 2024, our country’s Finance Minister, Nirmala Sitharaman, presented her 6th Union Government Budget for the Financial Year 2024-25.
The Budget stands as a crucial point in the nation’s financial journey as it is a stepping stone for its economic landscape. However, this was the Interim Budget, which means temporary, or say, short-term budget presented by the current Government before the upcoming elections.
The full or Regular budget will be announced by the new government in July 2024 after the general elections. Even if the same government comes back in power after the elections, the administration will change, which will announce the full budget. As of today, the dates for the upcoming general elections are yet to be announced by the Election Commission of India.
Moving back to the Interim Budget, the finance minister completed her speech in almost an hour. Let’s delve into the key highlights:
Infrastructure
A nation’s progress is often measured by its infrastructure development. The interim budget allocates significant resources to accelerate infrastructure projects across transportation and communication sectors.
1) The Government has allocated substantial funds for the coming FY 24-25. It has allocated INR 11 lakh cr. for capital expenditure.
2) Regarding the railways, 40,000 bogeys are to be transformed to Vande Bharat standards. Further, three major railway corridors were also announced:
- Port connectivity corridor
- Energy, mineral, and cement corridor
- High traffic density corridor.
3) FM applauded the current Infrastructure growth in our country and also mentioned in her speech that Indian carriers have placed orders for 1,000 new aircraft.
Women Empowerment
1) The Govt. has reserved 1/3rd of the legislative seats for women of the nation.
2) “Lakhpati Didi” Scheme – Aim to empower 2 crore women in villages, has reached 83 lakh self-help groups. It gained renowned success and benefited almost 9 crore women.
3) FM also mentioned about the “Triple Talaq” in her speech, which is now illegal.
Direct and Indirect Taxes
1) FM started the Taxes part by applauding the GST collections, which touched a record high. Further, she stated that Industry leaders view the GST transition as a positive one.
2) The IT filing processing will now take only 10 days, which is a considerable reduction in existing processing time.
3) Regarding Direct and Indirect taxes, no such change was announced in the budget by FM. However, there was one good news amongst this; existing tax demands of up to INR 25,000 of previous years (up to FY 2009-10) are to be withdrawn by the IT department.
Fiscal Deficit
1) For the FY 2023-24, the revised estimate of fiscal deficit is 5.8% of GDP.
2) Fiscal deficit for next year, i.e., 2024-25, is estimated at 5.1% of GDP.
Other Key Announcements
1) App. 25 crore people in the country got freedom from poverty. Further, govt. has provided financial assistance to app. 11.8 crore farmers under PM KISAN Yojana.
2) 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS, and 390 Universities have been set up.
3) FM emphasises focus on strengthening of domestic macro factors including Domestic Tourism and Infrastructure Investment.
4) For the youth of the nation, Pradhan Mantri Mudra Yojana (PMMY) has sanctioned 43 crore loans amounting to INR 22.5 lakh crore. A corpus of INR 1 lakh cr. will be established with a 50-year interest free loan. It will be for long-term financing or re-financing with low or nil interest rates.
5) One crore households will get up to 300 units of electricity every month with rooftop solarisation.
6) Girls in the age group of 9-14 will get free cervical cancer vaccination.
7) The Defence budget is to be increased to INR 1,111,111 crore, which will be 3.4% of our country’s GDP.
Market Reaction
On Budget Day, the Market participants had a neutral reaction. The major indices, such as Nifty 50 and Sensex, remain flattish, and so do the major sectors. However, PSU banks and Auto stocks saw a minor rally. Let’s have a look at the top gainers and losers:
Top Gainers
| Company Name | Sector | Percentage Change |
| Maruti Suzuki | Auto | + 4.4% |
| Bank of India | Banking | + 4.1% |
| Punjab National Bank | Banking | + 3.88% |
Top Losers
| Company Name | Sector | Percentage Change |
| Larsen and Toubro | Construction | – 2.35% |
| Ultratech Cement | Manufacturing | – 2.41% |
| Grasim | Textile | – 2.13% |
India VIX
There is one Index that saw the sharpest decline, i.e., India VIX. It is now trading at below 14, down almost 10%.
If you’re not familiar with the word VIX, it stands for Volatility Index. It represents the market perception for the next 30 days. The higher the VIX, the higher the volatility in the market. It is also known as the “Fear Index”.
Historical Data
Let’s see how markets reacted to the past budgets. As this was the Interim Budget, we have compiled data for the past Interim Budgets only and analysed how markets had reacted on those days. Have a look at the table below:
| Interim Budget Date | Finance Minister | Sensex | Nifty | Major Movement |
| 01-Feb-19 | Piyush Goyal | +0.59% | +0.58% | Auto and Defence stocks were the biggest gainers. |
| 17-Feb-14 | P.Chidambaram | +0.48% | +0.41% | Biggest Gainers: Tata Power +4.81%, Mahindra and Mahindra +2.83% |
| 16-Feb-09 | Pranab Mukherjee | -3.42% | -3.39% | Realty and Hospitality stocks ended with heavy loss. |
| 03-Feb-04 | Jaswant Singh | -1.31% | -2.25% | Almost all sectors were in red. |
Conclusion
The Union Interim Budget of 2024 addresses immediate challenges, prioritizing infrastructure related expenditures and current fiscal deficit. The government aims to propel the nation towards sustainable growth.
As citizens like us and major stakeholders analyse the budget’s impact, the hope is that these strategic measures will lay the groundwork for a resilient and prosperous India.
Frequently Asked Questions
1. Is the 2024 budget an interim budget?
Ans. Yes, the budget presented by the Finance Minister on 1 February 2024 was an interim budget before the General Elections.
2. What are the major announcements in this Budget related to Individual Taxation?
Ans. There were a lot of anticipations before the budget regarding the change in the tax slabs or increase in the Section 80C limit of the Income tax act. Unfortunately, no such announcement was made by the FM.
3. How much capital the govt. allocated to Infrastructure spending in the budget?
Ans. There were major announcements in the budget regarding the Infrastructure spending. The Govt. has increased the spending by 11.11% and allocated INR 11 lakh cr. for Capex.
4. How did markets react on the budget day?
Ans. Markets remained flattish on the budget day as market participants reacted neutrally.
5. What is India VIX?
Ans. India Volatility Index, also known as the “Fear Index” represents the market perception for the next 30 days. The higher the VIX, the higher the volatility in the market.
