Union budget 2024: Expectations you must know 

All eyes will be on Finance Minister Nirmala Sitharaman as the fiscal year 2024–2025 draws closer. On February 1, 2024, she is scheduled to deliver the interim budget. This budget is especially significant as it precedes the Lok Sabha Elections, due in April-May 2024.

An interim budget, unlike a comprehensive budget, is a provisional arrangement. It’s not about introducing new fiscal policies or major tax changes. Instead, it’s about keeping things running smoothly. Think of it as a temporary pass that allows the government to continue its essential spending until the new government presents a full budget, expected later in July.

In this blog, we are focusing on what industry experts anticipate from this interim budget in key sectors such as agriculture, energy, railway, manufacturing, and real estate. These predictions are crucial for understanding the government’s approach to supporting these sectors during a transitional phase. Let’s dive into these union budget expectations and their potential impact.

Agriculture

 In the previous budget, the Finance Minister allocated significant funds to agriculture, including for schemes like PM-Kisan and Kisan Credit Card, highlighting an increased focus on the sector.

This pattern is anticipated to continue in the next budget. Here are some common agriculture sector budget expectations:

• India’s agricultural productivity lags behind countries like China. For example, China achieves 6.7 tons per hectare of rice, compared to India’s 2.4 tons. Improving this requires educating farmers about new technologies and making these tools more affordable.
• Inadequate storage results in a substantial loss of produce. The budget should focus on building better storage facilities, like steel silos and micro-cold storage. By doing this, farmers’ selling windows will be extended and waste would be decreased.
• It is necessary to enhance the mandis’ (markets’) infrastructure. Facilities like grading centres and reefer vehicles are essential for farmers to assess and preserve the quality of their produce, thus enhancing their bargaining power.
• The government aims to foster agri-tech growth and encourage startups in rural areas through initiatives like Digital Public Agriculture Infrastructure and an Agriculture Accelerator Fund (AIF).
• With an emphasis on ensuring that every eligible farmer has access to institutional financing, the government will likely announce an increase in the agricultural loan target for the upcoming fiscal year, from the existing aim of ₹20 lakh crore to ₹22–25 lakh crore.

Also read: The past, present, and future of the Indian agriculture industry 

Energy

With ambitious goals and a rapidly evolving global energy scenario, here’s what we can anticipate in terms of energy sector budget expectations:

• The budget is expected to allocate substantial funds towards energy transition, with a previous allocation of around ₹35,000 crore for priority capital investments. For India to meet its net-zero emissions targets and maintain energy security, this investment is essential.
• A key focus remains on tripling global renewable energy capacity by 2030. However, revised targets for ethanol blending use appear unlikely. The commitment to renewable energy is clear, with a goal of expanding capacity significantly in the coming years.
• Transformative reforms in the power sector and city gas distribution are anticipated. These reforms are critical for handling the increased power demand, which peaked at 240 GW in September 2023, and for encouraging the adoption of cleaner fuel alternatives.
• The oil and gas sector, having faced volatility due to geopolitical tensions and fluctuating demand, expects budgetary measures that support natural gas consumption and provide stability.

Also read: The role of the energy sector in powering India’s growth.

Railway

As we anticipate the 2024-25 budget, the Indian railways, a pivotal element of the nation’s infrastructure, stands at the forefront of significant developmental expectations. Here’s a look at railway sector budget expectations:

• The budget is expected to allocate over ₹3 lakh crore to the railways, marking a 25% increase from the previous year. This substantial boost in funding aims to accelerate the modernisation of the railways, including faster trains, renovated stations, improved safety features, and the development of freight corridors.
• A major highlight is the planned rollout of 300-400 Vande Bharat trains, including those with sleeper coaches. These trains, known for their speed and efficiency, are expected to receive a significant portion of the budget for further expansion.
• After the tragic train disaster in Odisha, there’s an increased focus on safety. To help the government’s Mission Zero Accidents goal move forward more quickly, the safety budget for railroads is anticipated to roughly double. This includes installing safety fencing at vulnerable locations to enable trains to operate at higher speeds safely.
•  A significant capital is likely to be allocated for the Amrit Bharat Station Scheme, aiming to modernise and enhance railway stations across India. This scheme involves upgrading 1,275 stations, improving facilities, and executing comprehensive master plans.
• The proposed India-Middle East-Europe Economic Corridor (IMEC) is another aspect likely to receive attention. With the help of this project, trade and communication between India and the Middle East and Europe will be improved by building a network of rail, road, and maritime lines.

Manufacturing 

The following is what the manufacturing sector should anticipate from the next interim budget:

• Positive initiatives to facilitate conducting business in India are probably going to be introduced in the budget. These measures could range from simplifying bureaucratic procedures to providing financial incentives for manufacturers.
• The budget may enhance export incentives for Global Capability Centres (GCCs), aimed at boosting India’s exports and making it a more competitive player in the global market.
• There’s a strong focus on the ‘Make in India’ initiative, with the budget expected to provide substantial support to the Production Linked Incentive (PLI) schemes. These incentives are crucial for attracting manufacturers to India and encouraging them to scale up their operations.

Real estate 

The real estate sector in India, a key contributor to the economy and a significant employment generator awaits the interim budget for 2024 with high expectations. Here’s a rundown of budget expectations real estate:

• It is highly anticipated that the interest rate deduction cap under Section 24(b) will be increased. The real estate sector expects the limit to be raised from ₹2 lakh to ₹5 lakh per annum. This change would significantly benefit homebuyers and energise the market.
• Given the rising costs of construction materials and repo rates, the industry seeks a reduction in GST on under-construction properties. Additionally, the sector advocates for recognition as an “Industry” to attract investments, restructure debts, and secure favourable loans.
•  The current cap of ₹45 lakh for homes under the affordable housing category is considered insufficient, especially in metropolitan cities. The industry suggests increasing this cap to ₹ 60 lakh to ₹65 lakh, and even up to ₹1 crore in metro cities, to make affordable housing more accessible.
• For all transactions, the real estate sector demands the creation of a single window clearing mechanism. This would streamline processes, reduce project delays, and improve overall efficiency.
• To encourage rental housing, a 100% exemption for rental income up to ₹3 lakh for houses costing up to ₹50 lakh could be beneficial.

You may also like: Your guide to real estate investment trusts

Bottomline

As the nation expects the budget 2024-25 interim budget, key sectors await crucial policy support. Budget 2024 expectations include enhanced productivity in agriculture, renewable energy investments, railway modernisation, pro-business measures in manufacturing, and regulatory relief in real estate, setting the stage for India’s economic growth.