2 Feb 2024

#GS3 –01. Fiscal Deficit

In 2023-24, the fiscal deficit is expected to be at ₹17.35 trillion or 5.8% of the GDP. Fiscal deficit is the difference between what a government earns and what it spends. In 2024-25, it’s projected to fall to ₹16.85trillion or 5.1%, in line with the government’s aim of reducing the deficit to lower than 4.5% by 2025-26.

The government’s aim for a fiscal deficit of 5.1% of GDP in 2024-25 is about 70 basis points lower than the updated estimate for the current year. This puts the goal to reachthe4.5% mark by 2025-26 with in striking distance.The reduction relies on a check on expenditure:The total budget size is down from15.1% of GDP to14.5%,while receipts are likely to get a meager bump from 9.3% of GDP to 9.4%. The capital spending component,which had seen a massive boost in the previous years, is set to increase by only 20 basis points(but the new share,3.4%, will be the highest in two decades). In 2023-24, too,the capital spending budget was 3.4% of GDP, but revised estimates show that this will be curtailed marginally to 3.2%. While the capex budget is still rising,the capex by public sector enterprises(which They raise them selves outside the centre’s books, but is still an in dicator of their role In national growth)will continue to slip to just 1% of GDP from the pre-pandemic levels of 3.2–3.5%. Revenue expenditure will riseonly3.2% year-on- year,with no increase in outlay For the rural jobs scheme and under whelming hikes for the agriculture and rural sectors.
– Commentary in News

#GS3 — 02. On Budget prerogatives

When people haven access to houses and electricity and you also have money coming through direct (DBT),benefit you financially empower them and make sure that opportunities are given.

If 60% of all the aspirational districts In India are in the East,which is West Bengal, Bihar, Odisha, Jharkhand, we want to give maximum attention to make them not just come at par, but to become engines of power to steer the new India to become Viksit Bharat.

A report by RBI (Reserve Bank of India) has established the fact that economists around the world agree that if you spend ₹1 on capital expenditure,then one would get ₹1.45-1.46 as an effect in the short term.Instead, if you spend on revenue, it will be tough to get even 90 paise in return. After studying this, we opted for fast recovery from covid and chose the capital expenditure route. In two years, you can see that the recovery has been quick and was sustainable as well. So,capital expenditure will be import ant because we are looking at sustainable growth for the next three to five years.
-FM Nirmala Sitharaman

#GS3 –03. FAME Scheme

The government slashed The allocation for FAME, Its umbrella scheme for a switch of electric mobility, by 44% for FY25 even as it hiked the corpus for the production linked incentive scheme for autos by over seven times.

The reduction in allocation For FAME-II scheme comes on The back of a reduction in subsidies for electric two wheelers Last year, following allegations That seven electric two-wheeler Companies did not comply with localization norms. Sales of electric vehicles have gone off boil since then.

The outlay for the PLI scheme aimed at encouraging localization of futuristic vehicle technologies, was hiked more than seven-fold at ₹3,500 crore for FY25 from just ₹ 483.77 crore in FY24. The allocation for the PLI for advanced chemistry cell and battery storage also went up from ₹12 crore in FY24 to ₹250 crore. Even after two Years of being operational,the scheme is stuck in a limbo due to a lack of clarity on the procedures for claiming incentives. Less than₹500 crore worth of disbursals have happened.
– Commentary in News

#GS2 — 04. Healthcare in India

A cut in the food and fertilizer subsidy bill in FY25,along with tax revenue buoyancy, is set to help the Centre rein in borrowing, Creating room for the private sector to step in with investments.The centre’s food, fertilizer and petroleum subsidy is projected to decline by over 7% in FY25 to₹3.81 trillion,which officials attribute to a fall in global commodity prices. The reduction in subsidy in the next fiscal is not as sharp as the massive 22% mode ration seen in FY24,which came on the back of a high base in prices following the Ukraine war.

The food subsidy has also been lowered by over 3% to₹2 trillion,while the petroleum subsidy has been cut 2.6% for the next fiscal to ₹11,925 crore.

The government has taken several Steps since 2014 to boost domestic production of fertilizers and reduce imports,including reviving old fertilizer plants to make them viable.The government has also launched scheme to incentivize states to curb the use of chemical fertilizers. India has also entered into long-term supply agreements with global suppliers for assured imports of fertilizers and its raw materials at pre-determined prices.
-Commentary in News

#GS3 — 05. Support to Startups

₹1 trillion innovation fund Announced by finance minister Nirmala Sitharaman in the Interim budget on Thursday Is expected to give a big boost to local technology development and manufacturing, and help India move beyond providing high-tech services towards development of products. d the fund would provide 50-year loans with low or nil interest rates to private-sector companies to scale up research and innovation in sunrise sectors.

The fund would bridge a Crucial gap in terms of access to capital For R&D in emerging technologies,and help make India a manufacturing hub for products such as semiconductors,high-energy density batteries,and electric vehicles, among other things.The long tenor and low interest rates promised by the finance minister will ensure commercial viability of companies availing these loans.

The interim budget has proposed a one-year extension of the timeline for startups, sovereign funds and certain businesses in Gujarat International Finance Tech-City (GIFT-City) to claim tax breaks.How ever, a similar extension has not been given to new manufacturing companies.
– Commentary in News

#GS3 –06. Rooftop Solar and Climate Change

There is a provision of ₹10,000 crore for roof top solar In the budget.

Roof top solar for at least 300 units of power generation every month,which will be ‘muft bijli’ (free electricity) for the house holds.There will be some assistance and some kind of a funding which will be Extended. Beneficiaries can save
₹15,000-18,000 annually.“So,You are generating the renewable energy,providing renewable energy generators the free power which they would want to use, and the surplus they produce can be used for selling And earning money.
-FM Nirmala Sitharaman

Note : The move is expected to Boost the ambitious goal of 500 gigawatts (GW) renewable capacity by 2030.With a target of net-zero carb one missions by 2070, India is positioning it self as a front-runner in fighting climate change. Budget also outlined a plan to provide viability gap funding (VGF) for 1 GW off-shore wind capacity. The VGF is expected to be provided to two sites off the coasts of Gujarat and Tamil Nadu.

#GS3 –07. Tourism

Government would focus on developing new tourist destinations in India, in a positive development for domestic tourism,including spiritual tourism.

The Tourism ministry has set aside a mere ₹3 crore for overseas promotion of India for its ‘Incredible India’ campaign. The long-running, award-Winning campaign—under the sub-head of overseas promotion and publicity and market development assistance—was left by the way side this year,as the ministry shrank its allocation by 97% from last year’s ₹100 crore. The trend of tourism promotion has been declining.

Last year, the budget slashed overseas tourism promotion by a staggering amount. The ministry spent just ₹89 crore

in 2021-22 from its allocated ₹524crore.The amount spent in FY23 further fell to ₹15.89 crore,only to rise somewhat in FY 24 to ₹100crore.
– Commentary in News

#GS3 –08. Tax Dispute Withdrawal

Outstanding disputed tax demands for specific periods and amounts will be taken back.In her inter im budget speech,she said that demands upto ₹25,000 pertaining to the period up to the financial year 2009-10 and up to
₹10,000 for financial years 2010-11 to 2014-15 be withdrawn.

There are A large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books,causing anxiety to honest tax payers and hindering refunds of subsequent years.

The purpose of this move is to improve taxpayer services.
-FM Nirmala Sitharaman

#GS1 –09. Population Growth

The government will form a high-powered committee for an extensive consideration of the challenges a rising from fast Population growth and demographic changes.