The Indian government has been at the forefront of transforming the nation and is keen to embark on an exciting technological transformation journey to the next level.
Unlike the comprehensive annual budget, an interim budget is a short-term measure covering the fiscal year's initial months. It outlines the government's income and expenditure, enabling it to manage expenses until the formation of a new government post-election.
As in the past, like any pre-election budget, the upcoming budget, being an interim budget, is expected to be a populist one, with a few sectors expected to get a boost this year, including EV, fintech and education sector, automotive, and infrastructure. This would automatically help financial Services, majorly banks, do better. The inclusive approach of the government, in line with its motto of 'Sabka Sath, Sabka Vikas, Sabka Vishwas', focuses on some evergreen sectors like infrastructure, education, healthcare, and agriculture. It augurs well for inclusive growth. The budget of the ruling government before the elections, pleasing the vote bank, and ushering development in the needed sectors could be the driving force behind many announcements.
The 'Make in India' initiative was launched in September 2014 as a part of India's renewed focus on manufacturing, with the initiative's objective being to promote India as the most preferred global manufacturing destination. This campaign will be in the limelight, and domestic industry shall be given more impetus to grow. The protection and growth of MSMEs shall remain the government's priority this year.
The Indian government has been at the forefront of transforming the nation and is keen to embark on an exciting technological transformation journey to the next level. This ambitious endeavour encompasses a multi-faceted approach, be it leveraging digital infrastructure, promoting domestic hardware manufacturing, or introducing crucial legislative measures like the Digital Personal Data Protection Bill. The mission also strongly emphasises high-impact research and forging meaningful technology partnerships. The promotion of Centres of Excellence for Artificial Intelligence, announced last year, shall thus be on the agenda.
Though tackling the ongoing problem of job creation through infrastructure projects has been the government's goal all these years, this year may lay special emphasis on tourism and the development of unexplored tourist places that hold potential. This would boost tourism, help the inflow of more foreign exchange, create more jobs, give impetus to rail and air travel, and prevent the outflow of foreign exchange. As a sector, real estate has not experienced any major push from the government in the last few years. Their lobbying with the government may bring some exciting news for them. Nevertheless, the boost to tourism will have a directly proportional impact on real estate as well.
Fintech performance has not been up to the mark, so some tax holidays may be granted, and to achieve 'Net-Zero' emission goals, a few sops may be underway. For the education sector, not many changes were suggested last year in the existing framework in line with the National Education Policy (NEP). Since hundred percent FDI is allowed in the education sector, the budget may also lay down some provisions for foreign universities and higher education institutions.
The finance minister should create venues for industry-academia connections to improve the quality of research in the country. It is the need of the hour as –
India needs to exhibit its research acumen to the rest of the world
Research excellence can be one of the ways in which India can compete with existing research hubs like China. Research should first shift if we want manufacturing to move to India.
Ayushman Bharat Pradhan Mantri Jan Arogya Yojana is a national public health insurance scheme of the Government of India that aims to provide free health insurance coverage for low-income earners. Approximately the bottom 50% of the country qualifies for this scheme. Thus, healthcare will be a sector where the government would want to invest as much as possible. Innovation and R&D in healthcare should be given attention this year, like in previous years, to achieve the dual purpose.
Under supply chain and ecommerce, the National Logistics Policy (NLP), introduced last year, should be strengthened by promoting the adoption of EV infrastructure and the transition to green energy. The government is expected to pay some attention to air cargo logistics, especially amid the ongoing disturbances in the Middle East, including Europe.
Coming to the direct tax regime for individuals, the middle class has usually been ignored regarding friendly budget announcements. With good revenue collection till now, one can be hopeful that no adverse changes are made in their existing tax structure. With the slabs remaining the same and the inflation rising, maybe it's time to re-visit the standard deduction and make it a percentage of salary.
In the indirect tax regime, several sectors have been demanding a reduction in the GST rates. The government may look into these demands, especially for the poor-performing ones, and find a solution. The co-working sector has already approached the government with this request. However, with the GST Council closely monitoring the ground-level movements, the changes in this interim budget can be minimal.
To conclude, while Budget 2023 announced the 'Amrit Kaal' and conceptualised the 'Saptarishi Goals', Interim Budget 2024 shall focus on digital transformation, inflation reduction, and employment generation while working towards sustainable development goals. The emphasis on public-private partnerships to achieve the same could be high on the agenda. In short, the government would aim to consolidate India's position in the global market amidst the global socio-economic commotion.
About the authors CA. Dr. Kirti Sharma, Asstt. Professor, Great
Lakes Institute of Management Dr. Kirti Sharma is an Assistant Professor
with Great Lakes Institute of Management, Gurgaon. She is also an
Associate member of the Institute of Chartered Accountants of India. She
is a practitioner turned researcher, and her areas of interest include
accounting, knowledge management and its impact on performance, fintech
including insurtech, cryptocurrencies and blockchain.
CA. Nitin Narang, Nitin is Partner for International Tax and Transfer Pricing at Nangia & Co LLP. He is a Chartered Accountant (qualified in May 2002) and completed his LL.B. He possesses rich professional experience of more than 16 years post-qualification and more than 13 years in handling International Tax and Transfer Pricing matters of domestic/ multinational enterprises. Nitin has worked across a broad spectrum of industries like Oil & Gas, IT/ ITeS, Automotive, Pharma, FMCG, Chemicals/ Ink, EPC, Soga-sosha, Sourcing Support, Industrial Products, Consumer Durables, etc. Before joining Nangia & Co. LLP, he worked with Ernst & Young and Pricewaterhouse Coopers in Tax and Regulatory Services in International Taxation and Transfer Pricing teams.