India Interim Budget 2024

Charting Course in a Shifting World - From 'Amrit Kaal' to 'Atmanirbhar Bharat 2.0'

As the government strives for "Amrit Kaal," an era of prosperity, it confronts challenges from global headwinds, inflation, and fiscal issues. This year's budget is pivotal for steering India toward self-reliance and growth in an evolving global landscape, encapsulated by Atmanirbhar Bharat 2.0

Key Highlights

India's recent budget speech highlighted a promising step - offering viability gap funding (VGF) to jumpstart offshore wind energy with an initial 1 GW capacity. This holds immense potential for the offshore wind sector in India. Firstly, harnessing offshore winds, known for their stronger and steadier nature, can significantly boost clean energy generation, contributing to India's ambitious renewable energy targets. This not only benefits the environment but also enhances energy security by reducing dependence on fossil fuels. Secondly, VGF acts as a bridge, lowering the high initial investment barrier for developers, making these projects more financially attractive. This can accelerate project development, create significant job opportunities in construction, operation, and maintenance, and ultimately lead to cost reductions as technology matures. However, careful planning and execution are crucial. Challenges like grid integration and infrastructure development need to be addressed. Additionally, transparent allocation of VGF and accountable project execution are essential for public trust and project success. Overall, this initiative has the potential to be a game-changer for India's clean energy sector, paving the way for a greener future with economic growth and job creation.
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India's ambitious coal gasification plan by 2030 presents a complex scenario. On one hand, it aims for energy independence, boosting key industries and leveraging existing infrastructure. Advancements may lead to cleaner alternatives like hydrogen production, positioning India as an energy leader. However, this move raises environmental concerns due to greenhouse gas emissions, potentially conflicting with climate goals. Global trends favor cleaner energy, posing challenges for long-term sustainability and potential stranded assets. High upfront costs, technological uncertainties, and fluctuating energy prices present economic risks requiring careful planning and diversification. Success depends on balancing short-term benefits with long-term challenges. Stringent regulations and strategic investments in cleaner technologies are crucial for ensuring lasting benefits for India's energy future.
The phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes carries significant implications for the country. This initiative underscores India's commitment to promoting renewable energy sources and reducing carbon emissions. By mandating the blending of CBG, derived from organic waste, the government aims to provide a cleaner and more sustainable alternative to traditional fossil fuels in the transport and domestic sectors. This move aligns with India's broader goals of mitigating climate change, improving air quality, and enhancing energy security by diversifying its energy sources. Furthermore, the initiative could stimulate the agricultural and rural economies by encouraging the use of agricultural waste for biogas production. However, successful implementation will necessitate infrastructure development, regulatory adjustments, and technological advancements to accommodate the transition. As consumers may witness changes in fuel options and potential shifts in pricing, the move towards mandatory blending will likely have a transformative impact on India's energy landscape, promoting innovation and job creation in the renewable energy sector.
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The Electric Vehicle (EV) ecosystem in India is poised to experience a significant boost through the combined impact of the Production-Linked Incentive (PLI) scheme and the government's commitment to expanding and strengthening the e-vehicle ecosystem. The PLI scheme will incentivize Electric Vehicle Charging Infrastructure (EVCI) manufacturing, fostering the development of charging stations. In parallel, the government's focus on supporting e-buses aligns with the commitment to encourage greater adoption in public transport networks, utilizing payment security mechanisms. This dual approach aims to accelerate the growth of the EV ecosystem by addressing both charging infrastructure and electric vehicle manufacturing, promoting sustainability and widespread adoption of electric mobility.
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The Budget 2024 outlines the implementation of three major economic railway corridor programs, encompassing energy, mineral, and cement corridors, port connectivity corridors, and high traffic density corridors. These initiatives, identified under the PM Gati Shakti for multi-modal connectivity, offer several advantages. Firstly, they aim to enhance logistics efficiency, streamlining the movement of goods and materials. Secondly, the projects are expected to reduce costs associated with transportation. The development of these corridors is poised to alleviate congestion on high-traffic routes, subsequently improving the operations of passenger trains. This enhancement in railway operations contributes to both safety and increased travel speed for passengers. Additionally, when coupled with dedicated freight corridors, these economic corridor programs are anticipated to play a pivotal role in accelerating GDP growth and mitigating logistic costs, ultimately fostering economic development.
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The Budget 2024 introduces a transformative scheme centered on rooftop solarization, with the aim of providing up to 300 units of free electricity monthly to one crore households. This initiative, aligned with the vision expressed by the Hon’ble Prime Minister on the consecration day of the Ram Mandir in Ayodhya, carries significant implications for India's energy landscape. It promises substantial financial relief for households, enabling annual savings of fifteen to eighteen thousand rupees through the provision of free solar electricity and the option to sell surplus power to distribution companies. Moreover, the scheme fosters sustainable practices by promoting the adoption of electric vehicles through the availability of free solar electricity for charging. Additionally, it opens up entrepreneurial opportunities for a multitude of vendors involved in the supply and installation of rooftop solar panels. Simultaneously, the focus on technical skills in manufacturing, installation, and maintenance creates employment opportunities for the youth, contributing to skill development and economic growth. This comprehensive approach not only addresses energy concerns for households but also aligns with broader economic goals, emphasizing sustainability, entrepreneurship, and employment generation in the renewable energy sector.
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Budget 2024 introduces a scheme dedicated to advancing climate-resilient activities within the Blue Economy 2.0 in India. The scheme emphasizes a comprehensive and multi-sectoral approach, targeting restoration and adaptation measures for coastal regions. By integrating efforts in coastal aquaculture and mariculture, the initiative seeks to address the challenges posed by climate change in maritime activities. This forward-looking strategy acknowledges the importance of mitigating the impact of climate change on coastal ecosystems while simultaneously promoting sustainable practices. The scheme is expected to not only enhance the resilience of coastal areas but also contribute to the economic development of communities dependent on activities within the blue economy, aligning with India's broader commitment to environmental sustainability and inclusive growth.
Further, Budget 2024 highlights India's global appeal for business and conference tourism, leveraging the success of hosting G20 meetings in diverse locations. Recognizing the middle class's increasing travel aspirations, the budget emphasizes the potential for local entrepreneurship in tourism, particularly spiritual tourism. States are encouraged to develop iconic tourist centers, with a global branding and marketing strategy. The establishment of a quality-based rating framework and provision of interest-free loans aims to enhance tourist facilities. To address the growing interest in domestic tourism, projects for island connectivity, tourism infrastructure, and amenities will be undertaken, contributing to both tourism growth and employment generation. The budget reflects a strategic focus on harnessing tourism for economic development and inclusive growth.
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Taking cues from the very ethos of “success planning” eninrac through its dedicated team of sector consultants and industry specialist would be doing a round up on India Budget 2024-25 with live feeds, structured surveys and quality polls to offer unmatched point of view to all clients

India Budget 2024 - Summary

Fiscal Consolidation

  • Target: Reduce fiscal deficit to 5.1% of GDP in 2024-25, aiming for below 4.5% by 2025-26.
  • Revised Deficit: 2023-24 deficit revised to 5.8%, exceeding estimates but showing improvement.
  • Total Receipts: Projected at ₹30.80 lakh crore for 2024-25, driven by tax receipts of ₹26.02 lakh crore.
  • Total Expenditure:  ₹47.66 lakh crore for 2024-25, prioritizing infrastructure with a 16.9% increase in capital expenditure to ₹11.11 lakh crore.

Revenue Highlights

  • Tax revenue of Central Government projected at ₹23.32 lakh crore.
  • Non-tax revenue projected at ₹4.50 lakh crore.
  • Indirect taxes like Union Excise Duties and Customs expected to be major contributors.

Expenditure Breakdown

  • Major allocations for interest payments, defense, rural development, social welfare, and subsidies.
  • Increase in capital expenditure across various sectors, including infrastructure, agriculture, and energy.

Overall Assessment

  • The budget prioritizes economic growth while maintaining fiscal discipline.
  • Investments in infrastructure, green initiatives, and key sectors like agriculture and MSME are emphasized.
  • Social welfare, digitalization, and development of smaller cities receive attention.
  • The long-term impact remains to be seen, but the budget sets a direction for sustained and inclusive growth.

India Budget 2024 - Key Anticipated

Taxpayers Hope for Relief in Budget 2024: Will Expectations Be Met?

Lower and middle-income taxpayers await Budget 2024, anticipating relief through lower tax rates or expanded tax slabs.

  • Lower tax rates under new tax regime: While the new tax regime offered lower rates, the absence of deductions and exemptions made it less attractive. Taxpayers hope for a balance between lower rates and relevant deductions to incentivize switching regimes.
  • Increased deduction limits under old regime: Expectations include higher limits for popular deductions like PPF, health insurance, and housing loan interest payments (sections 80C, 80D, and 24B).
  • Raised standard deduction: Both regimes' standard deductions haven't kept pace with inflation. Taxpayers expect an increase to reflect rising living costs.
  • Indexation of tax slabs to inflation: Automatically adjusting tax slabs to inflation would provide permanent relief from the rising cost of living.

Doubling Down on Rooftop Solar Power

India's Suryodaya Yojana aims for 40 GW rooftop solar, but at 12 GW, it's underwhelming. Hopes are high that Budget 2024 will provide a boost.

  • Increased subsidies and financing options: Expanding support for residential installations through larger subsidies, soft loans, and innovative financing mechanisms.
  • Simplified regulations and approvals: Streamlining permitting processes and reducing bureaucratic hurdles to encourage wider adoption.
  • Enhanced grid integration and net-metering policies: Facilitating seamless integration of rooftop solar power into the grid and ensuring fair compensation for surplus energy generated.
  • Targeted outreach and awareness campaigns: Educating and empowering potential beneficiaries, particularly in rural areas, about the benefits of rooftop solar.
  • Focus on indigenous manufacturing and technology: Incentivizing domestic production of solar panels and related equipment to promote self-reliance in the energy sector.

Electrifying Affordability for EVs

With electric vehicles (EVs) crucial for India's clean mobility future, their affordability remains a key concern. Budget 2024 holds high expectations for measures to bridge this gap.

  • Reduced GST on lithium-ion batteries: Lowering the current 18% GST on batteries, a major cost component, is crucial to make EVs more affordable.
  • Clarity on FAME 3 subsidies for electric trucks: Launching the much-awaited FAME 3 scheme with clear subsidy structure for electric trucks is essential to encourage their adoption in crucial sectors like logistics and freight.
  • Boosting domestic battery manufacturing: Investments in and incentives for domestic battery production will reduce dependence on imports and potentially lower battery costs.
  • Upskilling workforce for EV sector: Developing skilled personnel across the EV value chain through training programs will be critical for smooth adoption and maintenance.

Building a Robust and Sustainable Logistics Network

The Indian logistics sector, witnessing significant growth, anticipates the upcoming budget to further enhance and modernize the nationwide infrastructure and technology ecosystem.

  • Continued infrastructure expansion: Building upon initiatives like PM Gati Shakti and the National Logistics Policy (NLP), increased allocations for:
    • Road and railway network expansion: Improving connectivity and addressing bottlenecks.
    • Modernization of ports and airports: Enhancing efficiency and capacity.
    • Multimodal logistics hubs: Facilitating seamless intermodal cargo movement.
  • Digitization push: Effective budgetary support for:
    • Streamlining regulatory processes: Easing approvals and clearances.
    • Deploying advanced technologies: AI, ML, IoT, and blockchain for data-driven operations and optimization.
    • Skilling the workforce: Equipping individuals with skills for digital logistics roles.
  • Technological advancements: Focus on adopting:
    • Advanced warehousing and sorting solutions: Automation and robotics for improved efficiency.
    • Real-time visibility platforms: Enhancing transparency and traceability throughout the supply chain.
    • Last-mile delivery innovations: Exploring drones and electric vehicles for sustainable deliveries.
  • Sustainability considerations: Encouraging:
    • Use of clean energy: Incentives for solar power and electric vehicles within the logistics sector.
    • Waste reduction initiatives: Promoting sustainable packaging and circular economy practices.
    • Fuel efficiency measures: Mandates and incentives for cleaner transportation options.

Widening the Manufacturing Net with Expanded PLI Scheme

The upcoming Union Budget 2024 is expected to significantly expand the Production Linked Incentive (PLI) scheme, a move that could have a major impact on India's manufacturing sector.

The budget is anticipated to allocate ₹3 trillion over 5 years to expand the PLI scheme to 20 additional sectors. This would be a substantial increase from the current scheme, which covers 14 sectors with an allocation of ₹2 trillion.

IT Sector Seeks Digital Springboard

The Indian IT sector anticipates the 2024 Union Budget to ignite its growth through strategic investments and support for key areas.

  • Digital infrastructure boost: Increased allocations for:
    • Broadband connectivity: Expanding fiber-optic networks and promoting affordable access.
    • Data centers: Encouraging private investment and streamlining approvals for data center infrastructure development.
    • Cloud computing: Supporting the adoption of cloud services across government and businesses.
  • R&D and skill development:
    • Increased funding for research institutions and universities: Fostering innovation in areas like AI, IoT, and cybersecurity.
    • Skill development programs: Upskilling and reskilling the workforce for emerging technologies.
    • Promoting STEM education: Encouraging young talent towards careers in IT and related fields.
  • Nurturing innovation hubs:
    • Tax incentives and regulatory support for startups and innovation hubs: Fostering a vibrant ecosystem for entrepreneurship.
    • Public-private partnerships (PPPs) for technology development: Leveraging private sector expertise for innovative solutions.
  • Supporting cutting-edge technologies:
    • Augmented funding for cybersecurity: Addressing growing threats and promoting cyber resilience.
    • Backing for AI, IoT, and 5G adoption: Encouraging the development and use of these transformative technologies.
    • Promoting R&D in emerging technologies: Supporting research in areas like blockchain and quantum computing.
  • Tax policy revisions for IT exports:
    • Rationalizing tax structures and reducing compliance burden: Making India a more attractive destination for IT companies.
    • Incentives for export-oriented IT units: Encouraging growth in the IT export sector.

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