A lot, some might say. However, the Union Budget 2024 appears more about shifting numbers rather than introducing significant changes from what Finance Minister Nirmala Sitharaman presented on February 1, just months before the Lok Sabha elections. While the election results may not have met the BJP-led NDA's expectations, two new partners now have the bargaining power to demand their due share.
Let's examine how the Budget 2024-25 figures have evolved from the interim budget to the first regular budget of the BJP-led NDA government, now in its third term.
First, consider the budget size. The final budget has increased by Rs 54,744 crore compared to the interim budget. The total expenditure, initially estimated at Rs 47.65 lakh crore in the interim budget, has been revised to Rs 48.20 lakh crore.
Part of this increase is reflected in the total resources being allocated to the states, including the devolution of the state's share, grants, loans, and fund releases under centrally sponsored schemes. Resources allocated to states have risen by Rs 68,918 crore, now budgeted at Rs 22.91 lakh crore compared to Rs 22.22 lakh crore in the interim budget. While the devolution of the state's share in taxes and Finance Commission grants is largely fixed, the central government can still provide support through special assistance loans for capital expenditure. This budgeted figure has increased from Rs 1.30 lakh crore in the interim budget to Rs 1.50 lakh crore. Additionally, special assistance under demand transfers to states has grown by Rs 16,000 crore, from Rs 4,000 crore in the interim budget to Rs 20,000 crore in the regular budget.
The rise in the total budget size is notable, especially given the slight decline in nominal GDP estimates. Despite maintaining the estimated nominal GDP growth rate at 10.5%, the projected nominal GDP has decreased from Rs 327.71 lakh crore in the interim budget to Rs 326.36 lakh crore in the final budget. The Economic Survey 2024 forecasts a real GDP growth rate of 6.5-7%, with risks to achieving the upper end of this range in 2024-25. The Reserve Bank of India (RBI) estimates a real GDP growth rate of 7.2%. While the budget avoided projecting a higher nominal GDP growth rate of 11% that some experts had anticipated, it has reduced the nominal GDP size in absolute terms by Rs 1.34 lakh crore compared to the interim budget.
In terms of receipts, non-tax revenue estimates have surged by a remarkable Rs 1.46 lakh crore, with non-tax revenues now budgeted at Rs 5.45 lakh crore compared to Rs 3.99 lakh crore in the interim budget. Conversely, tax revenues have decreased by Rs 18,075 crore between the interim and regular budgets, with projections now at Rs 25.83 lakh crore compared to Rs 26.01 lakh crore in the interim budget. The dividend bonanza from the Reserve Bank of India (RBI) has contributed Rs 2.11 lakh crore as non-tax receipts. The finance minister has also increased the proceeds from dividends and profits, including the RBI dividend, from Rs 1.50 lakh crore in the interim budget to Rs 2.89 lakh crore in the regular budget.
On the fiscal deficit front, there is good news. The government has made progress in containing the fiscal deficit, reducing it from the projected 5.1% of GDP for 2024-25 in the interim budget to 4.9%. This reduction of Rs 72,182 crore means less reliance on borrowing. Consequently, there is reduced dependence on financing the fiscal deficit through small savings by Rs 46,138 crore, instead of reducing market borrowings. While market borrowings are cheaper than small savings, they can put pressure on yields. Given the high interest rates and persistent inflation outlook, reducing reliance on small savings is a prudent approach.
The allocation for the Pradhan Mantri Awas Yojana (PMAY) has increased from Rs 80,671 crore in the interim budget to Rs 84,671 crore. The final budget also divides PMAY into urban and rural segments, with urban allocation at Rs 30,171 crore and rural allocation at Rs 54,500 crore. Additionally, the allocation for pensions, agriculture, and education sectors has seen increases in the regular budget.