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Interim Budget 2024: Concerns over GDP, spending

cuts; fiscal deficit is bright spot

Income Tax Slab Budget 2024
Highlights: On February 1, Finance
Minister Nirmala Sitharaman presented
the Union Budget 2024 in the Lok Sabha,
marking it as an interim budget just
ahead of the Lok Sabha Elections. No
changes were introduced in the tax slabs
for both the old and new regimes.
Despite aligning with historical interim
budgets, the surprising aspect was the
Finance Minister's announcement of
maintaining status quo in direct and
indirect taxes, including import duties, for
the FY 2024-25, which has captured industry attention.
The complete budget is slated to be presented in July after the formation of the new government following
the General Elections. FM Sitharaman had previously stated that major announcements would be
deferred, given the upcoming polls in April-May this year. In Budget 2023, the Modi Government
implemented several new regulations for income tax, with a notable move being the designation of the new
income tax regime as the default option. However, citizens retain the choice to opt for the benefits of the old
tax regime.
The Interim Budget appears to be positive and growth-oriented, striking a well-balanced approach. The
Finance Minister has successfully maintained a low fiscal deficit while emphasizing growth and welfare
measures. The budget extends the roadmap established over the past decade, with a focus on key sectors
such as Infrastructure, Railway, Renewable Energy, Housing, and Manufacturing. The commitment to high
capital expenditure is expected to drive long-term economic growth.
The impact of the lower fiscal deficit is evident in the bond market, with a notable 8 basis points decrease in
yield already observed, reflecting positive market sentiment. The trajectory of the fiscal deficit has been
deliberately kept low, garnering positive attention from a rating, Foreign Institutional Investor (FII) flow, and
currency perspective. The emphasis on corridor port connectivity is anticipated to significantly reduce
turnaround time, imparting a positive effect on the overall economy. While it is an interim budget, the final
version is expected to be unveiled post-election.