All set for Budget 2024: Tax relief unlikely, sops for untapped sectors

New Delhi: Ahead of Lok Sabha polls, the interim Budget, which will be tabled by finance minister Nirmala Sitharaman on Thursday, is expected to be ‘non-event’. However, it is learnt that the government may extend some beneficiary schemes for common man as well as an expansion of production-linked incentive or PLI scheme for some small business houses, a top government source said on Wednesday.

An interim budget or also known as a vote-on-account generally focuses on maintaining essential services until the new government takes over and several key expectations remain. Overall, an interim budget is a temporary measure needed in specific situations. As the Lok Sabha polls are set to take place this year in April-May, a full-fledged budget is not being presented by Ms Sitharaman on February 1. However, a complete budget and the economic survey will be presented in July, when the results are declared and a new cabinet is appointed.

“There is unlikely any major tax relief for the middle class, but most likely, some untapped sectors such as apparel, toys and footwear among others may get some tax sops for boosting employment generation. While the interim budget ensures smooth functioning during transition periods, it’s important to remember that it’s not a substitute for a full budget with its comprehensive vision and long-term economic direction,” the source added.

However, a top government official is learnt to have said that an infrastructure gap is 'plaguing' the Indian economy and there is a need to fill this gap. “The government will need to continue focusing on capital expenditure in the budget as the investment from private firms is still weak” said former Niti Aayog vice chairman Rajiv Kumar in an interview.

Kumar also highlighted that the capital expenditure during the present government’s tenure has yielded results and produced much better quality of infrastructure, which was needed to make the Indian industry globally competitive. “The capex thrust will continue because the private investment still remains a bit weak. And also, we need to overcome the infrastructure deficit that has plagued our economy and also the logistics cost, which are very high and can only be covered by rising public capital expenditure” Kumar said.

While industry body Confederation of Indian Industry (CII) has in its key proposals for Vote on Account/Budget 2024-25 suggested that the PLI scheme be expanded to labour-intensive sectors for boosting employment generation, common man and middle class also expect increased income tax slabs or deductions to boost consumer spending.

“Bedsides, farmers also demand continuation or increase in PM Kisan payouts to support rural income, while infrastructure sector giants push for development, particularly in railways, roads, and semi-urban areas. Also in the education sector and healthcare, there is a demand for an increased allocation for education and healthcare to enhance social welfare,” a government official said.

However, the government is making its all-out efforts to promote the digital economy through policies and incentives to accelerate the growth of the economy. Besides, the government’s new initiative is also in focus on green, clean energy resources and renewable energy infrastructure as well.