Aakhya Weekly #82 | The Pre-Election Budget is Tabled

In Focus: Key takeaways from Budget 2024-25

Aakhya Policy Team

Budget Snapshot

The Interim Union Budget for FY 2024-25 marks the last budget of the BJP’s second term, and Finance Minister Nirmala Sitharaman outlined the Centre’s key fiscal and developmental priorities ahead of the General Election in May. Understandably, the prelude to the announcements catered to NDA’s achievements since 2014, with the Minister highlighting the positive transformation of the Indian economy over the past decade and the government's ‘Viksit Bharat’ vision of achieving developed country status by 2047. The allocations indicate the government’s focus on infrastructure development, agricultural growth, green energy initiatives, and railways. In line with this, the government’s efforts this year will be centred on increasing infrastructure spending, enhancing railway safety and efficiency, and the expansion of green energy and electric vehicle ecosystems.

There were no changes in tax rates, as a more comprehensive budget is likely to cover future changes after the 2024 elections. While this could be a dampener for middle class taxpayers, a new scheme announcement centred on providing better urban housing for rent-paying urban poor or those living in slums, could be viewed as a positive. In addition to this, the government doubled down on allocations for social welfare schemes like the 'Lakhpati Didi' Scheme, electricity subsidies, and healthcare coverage under Ayushman Bharat for Anganwadi workers. In agriculture, the government aims to promote private and public investment in agriculture and food processing to boost farmers' incomes and reduce post-harvest losses. These announcements could be seen as an attempt to woo the farming community, middle-class, and women constituents, who could significantly impact the electoral success for the incumbent government. With a 2025 capex outlay of ₹11.1 lakh crore, this budget shows that the NDA is laying down a confident roadmap in the run up to the next budget post the elections.

Key takeaways

Capital Expenditure

• 3X capex outlay in the past 4 years– economic growth and employment creation

• Capex outlay for next year increased by 11.1% to INR 11,11,111 Cr (3.4% of GDP)

Taxation

• No changes to tax slabs for direct and indirect taxes and import duties.

• Tax benefits for startups, sovereign wealth & pension funds, and IFSC extended to March 2025.

• Outstanding direct tax demands up to INR 25,000 Cr (up to FY 2009-10) and INR 10,000 Cr (FY

• 2010-11 to 2014-15) to be withdrawn, benefitting approx. 1 Cr taxpayers

Logistics and Infrastructure

• Three major economic railway corridor programs: (a) energy, mineral, and cement corridors; (b) port connectivity corridors; and (c) high traffic density corridors.

• 40,000 rail bogies will be converted to Vande Bharat standards

• Urban transformation through the promotion of Metro Rail and NaMo Bharat.

• Expansion of existing airports and development of new airports under the UDAN scheme.

• Significant reduction in Import release time over the last 4 years:

  • 47% to 71 hours at Inland Container Depots

  • 28% to 44 hours at air cargo complexes

  • 27% to 85 hours at seaports since 2019

• A new scheme for bio-manufacturing and bio-foundry to provide eco-friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals, and bio-agri-inputs–transforming into regeneration-based consumptive manufacturing

• Blue Economy 2.0 -- New scheme to restore and adapt coastal aquaculture and mariculture.

• Increase in budget allocation:

  • Grid-connected Solar Power: INR 8,500 Cr (FY 24-25). Up from INR 4,970 Cr (FY 23-24).

  • National Green Hydrogen Mission: INR 600 Cr (FY 24-25). Up from INR 297 Cr (FY 23-24).

Labour and Skilling

• Skill India Mission has trained 1.4 crore youth, upskilled and reskilled 54 lakh youth, and established 3000 new ITIs

• A large number of new institutions of higher learning, namely 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS, and 390 universities have been set up

Technology

• Establishment of INR 1 Lakh crore corpus with a 50-year interest-free loan provision

  • Aimed at long-term financing

  • Encouraging the private sector to scale up research and innovation in sunrise sectors

• New scheme focused on strengthening deep-tech technologies for defense purposes, aimed at expediting self-sufficiency ('Atmanirbharta') in the defense sector.

• Increase in Budget Allocation:

  • PLI scheme: INR 6,200 crore in 2024-25 (up from INR 4,645 crore in 2023-24).

  • Modified Programme for Development of Semiconductors and display manufacturing ecosystem: INR 6,903 crore in 2024-25 (up from INR 3,000 crore in 2023-24)

Health

• Encourage Cervical Cancer Vaccination for girls (9-14 years)

• Anganwadi centers’ upgradation under Saksham Anganwadi and Poshan 2.0 to be expedited for improved nutrition delivery, early childhood care and development

• U-WIN platform for immunization efforts of Mission Indradhanush to be rolled out

• Health cover under Ayushman Bharat scheme to be extended to all ASHA, Angawadi workers and helpers

• Increase in budget allocation for Ayushman Bharat-PMJAY from INR 7,200 crore in 2023-24 to INR 7,500 crore in 2024-25

Tourism

• Long-term interest free loans to be provided to States to encourage development.

  • To develop iconic tourist centres-to boost business, local entrepreneurship

  • Framework to be established to rate these centres on quality of services and facilities

• New port connectivity, tourism infrastructure projects in Lakshadweep and other islands.

Agriculture

• New schemes and initiatives to promote investments in post-harvest activities

  • Aggregation, modern storage, efficient supply chains, primary and secondary processing, marketing, and branding.

• Inspired by the adoption of Nano Urea, Nano DAP application to various crops will be expanded in all agro-climatic zones.

• A strategy will be formulated to achieve ‘Atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower. This will cover:

  • Research for high-yielding varieties

  • Widespread adoption of modern farming techniques

  • Market linkages, procurement, and value addition

  • Crop insurance

• A comprehensive program to support dairy farmers to be built on the success of existing schemes such as

  • Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development

• Funds for dairy processing and animal husbandry.

• Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to:

  • Enhance aquaculture productivity from existing 3 to 5 tons per hectare

  • Double exports to INR 1 lakh crore

  • Generate employment for 55 lakh people in the near future.

• Five integrated aqua parks will be set up.

Others

• Focus on Eastern states’ development- to turn them into powerful drivers of India’s growth.

• A scheme supporting the middle class residing in rented houses, slums, chawls, and unauthorized colonies in purchasing or constructing their own homes shall be launched.

• Outlay for Mahatma Gandhi National Rural Employment Guarantee Scheme increased to INR

• 86,000 crore in 2024-25 from INR 60,000 crore in 2023-24.

Top Stories of the Week

NTPC, Maharashtra govt. to develop green hydrogen projects

NTPC Green Energy Limited (NGEL), a subsidiary of NTPC, signed an MoU with the Maharashtra government on January 29 to develop green hydrogen and its derivatives—green ammonia and green methanol. The proposed scale of these projects is substantial, aiming to achieve a production capacity of up to 1 million tonne per annum.

The signed agreement also includes the creation of pumped storage projects of 2 gigwatts (GW) and the development of renewable energy projects with or without storage up to 5 GW in the state. This strategic initiative aligns with Maharashtra's overarching green investment plan for the next five years, projecting a significant potential investment of around ₹80,000 crore.

NTPC has set an ambitious goal to achieve a renewable energy capacity of 60 GW by 2032. This recent expansion into clean energy initiatives reflects India's commitment to fostering economic growth while reducing carbon intensity. As a wholly-owned subsidiary of NTPC, NGEL envisions taking a leading role in the renewable energy journey. Currently, NGEL boasts an operational capacity exceeding 3.4 GW and has an extensive project pipeline totaling 26 GW, with 7 GW currently under implementation, consolidating its position as a key player in the renewable energy landscape.

Centre Announces Import Duty Cuts on Mobile Components

Ahead of the budget, the Ministry of Finance announced a reduction in import duties on the residuary category for mobile phone manufacturing, reducing the rate from 15% to 10%. The notification released by the Ministry detailed specific parts affected under the “Other Category”, which includes battery covers, front covers, GSM antennas, and various mechanical items made of plastic and metal. The import duty on inputs used in the manufacturing of these components has also been entirely eliminated, with items like adhesives, steel sheets, and logos now having zero input duties.

Union Minister of Electronics and IT, Ashwini Vaishnaw, suggested that this move towards customs duty rationalisation is aimed at providing much-needed certainty and clarity for the electronics manufacturing industry. The decision could be viewed as a response to industry players’ requests on relaxing duties, given that it also aligns with their efforts to place India on a level playing field globally. Through initiatives like the Production Linked Incentive Schemes, the government is actively working to establish the country as a global electronics hub. By gradually reforming such regulations, the Government is creating a conducive environment for domestic electronics manufacturing and production, enhancing cost efficiencies,  and positioning India as a formidable player in the global electronics market.

A Few Good Reads

• C Raja Mohan offers his take on China’s economic troubles and India’s prospects amidst persisting geopolitical disruptions 

• In this piece, Nilanjan Ghosh argues that water markets, despite facing resistance, play a crucial role in efficiently allocating water resources, especially in the face of scarcity. 

• Ruchira Ghosh and Ahana Raina highlight the underrepresentation and misconceptions surrounding female internal migration in India, pointing out flaws in data collection and societal perceptions. 

• In this article, David Fickling discusses how the wind power industry is learning from Big Oil's tactics, such as lobbying and financial engineering, to navigate challenges and capitalize on opportunities in the transition to renewable energy.