Understanding the Annual Budget 2024

The Indian economy is a vast and dynamic entity that thrives on careful planning and resource allocation and just like managing your household finances, the government needs a well-defined plan: The Annual Budget - a crucial roadmap outlining the government's spending and revenue plans for the year ahead. This blog empowers you to understand this crucial document, allowing you to see how it impacts your everyday life.

Explaining the Annual Budget

Think of your family planning for the next year. You discuss how much income you expect (salary, savings) and how you'll spend it (rent, groceries, education). The annual budget works similarly for the government. The annual Budget acts as a detailed roadmap for the Indian government's spending and income for the upcoming fiscal year. It outlines how much money the government expects to collect (revenue) and how it plans to spend that money (expenditure) on various sectors like education, healthcare, infrastructure, and social welfare programs.

Annual Budget 2024-2025 Announcement

The annual budget is presented by the Finance Minister – currently, Ms. Nirmala Sitharaman – in the Parliament, typically in February. The budget for the fiscal year 2024-2025 was presented on 23rd July 2024.

What is the Annual Budget?

Think of the annual budget like a detailed financial plan your family creates for the year ahead. It outlines:

Estimated Income

This includes revenue sources like taxes, disinvestment (selling government assets), and borrowings. According to the Finance Minister, the expected total spending for 2024–25 and the total earnings (excluding borrowings) are ₹48.21 lakh crore and ₹32.07 lakh crore, respectively.  It is predicted that net tax receipts will amount to ₹25.83 lakh crore.

Source:https://www.indiabudget.gov.in/

Planned Expenditure

This includes spending on various sectors like education, healthcare, infrastructure, defense, and social welfare programs.This year, ₹11,11,111 crore, or 3.4 percent of GDP, has been set aside for capital spending.

Source:https://www.indiabudget.gov.in/

Fiscal Deficit

This is the difference between the government's income and expenditure. Ideally, the government aims to keep this deficit under control. The fiscal deficit in 2024-2025 will amount to 4.9% of GDP.

Highlights of Annual Budget 2024-2025 

The Budget 2024 focuses on boosting employment, skilling, and infrastructure development. Here's a table outlining some key highlights:
 

Why is the Annual Budget Important for Indians?

The budget directly or indirectly impacts every Indian citizen. It influences:

Taxation

The budget might introduce changes to tax slabs, rates, and deductions which can affect your take-home pay. Let’s have an eye over the new tax regime introduced in the budget 2025-25. 

Source:https://www.indiabudget.gov.in/

Government Spending

Increased allocation to healthcare can improve medical facilities, while spending on infrastructure projects can lead to better roads, public transportation, and electricity supply.

Social Welfare Programs

Increased funding for social welfare schemes can benefit the underprivileged sections of society. Budget allocations for schemes like MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) can affect rural employment and living standards.

Source:https://www.indiabudget.gov.in/

 How is the Annual Budget Different from the Interim Budget?

An interim budget is presented in an election year before the formation of a new government. It usually maintains the existing spending levels and avoids announcing major policy changes. The annual budget, presented later in the year, provides a more detailed roadmap for the entire financial year.

As 2024 is an election year, an interim budget was presented in February 2024, focusing on essential expenditures to keep the government running until the final budget is presented after the elections. The final budget, presented in July 2024, provides a more comprehensive roadmap for the entire fiscal year.

Also read: What is the difference between an Interim Budget and an Actual Budget?

Features of the Annual Budget

The key features of annual budget 2024-2025 is a detailed document with various components

Presented by the Finance Minister

The Finance Minister's  delivers a speech outlining the key aspects of the budget, the government's vision and priorities. They are responsible for formulating and presenting the budget in the Parliament.

Parliamentary Approval

The budget needs to be approved by both houses of Parliament (Lok Sabha and Rajya Sabha) before it can be implemented.

Focus on Fiscal Prudence

The government strives to minimize the fiscal deficit, ensuring responsible spending.

Budget Documents

Detailed reports on revenue and expenditure plans for various ministries.

Finance Statements

A legal document proposing changes in tax laws as per the budget proposals.These detailed documents contain information on revenue, expenditure, and the fiscal deficit.

Who Should Read and Follow the Annual Budget 

Here's who should follow the budget:

Everyone! 

Here's why and how:

Every Indian Citizen

Understanding the budget helps you comprehend how the government plans to spend public money and how it might affect your life.Understanding how your tax money is being spent also  empowers you as a citizen.

Investors

The budget can impact various sectors and companies, so investors should analyse its implications because budgetary allocations for various sectors can influence investment decisions.

Businesses

Tax changes and infrastructure development plans can impact business operations.

How to Read and Follow the Budget - Sources and References

Here are some sources to read and follow the budget:

Official Government Websites

Union Budget of India: https://www.indiabudget.gov.in/

Press Information Bureau: https://pib.gov.in/Allrel.aspx

Full Budget speech:https://www.indiabudget.gov.in/doc/Budget_Speech.pdf

Financial News Websites

Major news websites like The Economic Times and Moneycontrol provide detailed budget analysis.

Investment Research Reports 

Brokerage firms and research houses publish reports analysing the budget's impact on various sectors.

Key Priorities of Budget 2024-2025

The Annual Budget 2024-2025 focuses on several key priorities aimed at boosting the Indian economy and improving the lives of its citizens. Here's a quick breakdown:

1. Employment & Skilling

Problem: Unemployment remains a significant challenge in India.

Solution: The budget allocates ₹2 lakh crore for creating job opportunities and skilling initiatives. This aims to equip the workforce with relevant skills for the evolving job market.

2. Infrastructure Development

Problem: India needs robust infrastructure to support economic growth and improve connectivity.

Solution: The budget emphasises investments in transportation, logistics, and digital infrastructure projects. This will facilitate smoother movement of goods and services, improve access to remote areas, and support overall economic activity.

3. Agriculture & Farmer Welfare

Problem: Ensuring agricultural productivity and farmer income is crucial for rural development.

Solution: ₹1.52 lakh crore allocation is dedicated to the agriculture sector. This could include initiatives for better irrigation facilities, improved seeds and technology, and better market access for farmers.

4. Education

Problem: India needs to invest in quality education and skill development to realise its demographic dividend.

Solution: The budget allocates ₹1.48 lakh crore for education, employment, and skilling. This could go towards improving school infrastructure, providing scholarships, and promoting vocational training programs.

5. Fiscal Consolidation

Problem: Managing the fiscal deficit is crucial for long-term economic stability.

Solution: The budget aims to maintain the fiscal deficit at 4.9% of GDP. This involves controlling government spending while maximising revenue collection.

Benefits of the Annual Budget

Transparency

The budget provides transparency in government spending and promotes accountability,It provides citizens an insight into government spending and priorities.

Economic Planning

It helps the government plan for the future and allocate resources efficiently and helps businesses and individuals in making informed financial decisions based on government plans.

Accountability

Holds the government accountable for how it manages public funds.

Conclusion

Understanding the annual budget empowers you to be a more informed citizen. By following the government's spending plans and priorities, you can gain a deeper understanding of how your tax money is being used and how it might impact your daily life. This knowledge can also empower you to hold your elected officials accountable for responsible fiscal management.