From Interim to Full Term: Comparing the February and July 2024 Budget Allocations
The July 2024 budget shows conservative fund reallocation with stable capital expenditure, reflecting cautious governance under the new coalition dynamics.
The July 2024 budget represents a continuation of fiscal policy under the incumbent government, following the interim budget presented in February 2024 before the elections. This earlier budget was crafted under the expectation that the same government would retain power, albeit with a forecasted reduced majority. As predicted, the government did continue, but now it faces a shifted political landscape, relying on coalition partners to govern. Consequently, the financial strategies initially outlined in the February budget have been significantly adjusted to align with the new government’s altered priorities.
Instead of comparing this budget with that of FY 2023-24, it is more insightful to examine the deviations from the February 2024 interim budget. However, this comparison is not straightforward, as the July document omits the February figures. Therefore, one must reference a separate document to meticulously compare changes in allocations line by line—a laborious but necessary task to understand the shifts in governmental priorities. I have spent considerable time analyzing the expenditure aspects of the budget to discern these changes. This analysis aims to detail these shifts with as much granularity as possible, allowing readers to clearly perceive how political dynamics have reshaped budgetary allocations and priorities.
Department of Agriculture and Farmers Welfare: Revenue + ₹5,000 Crore
The funding for the Department of Agriculture and Farmers Welfare has been augmented by ₹5,000 crore, bringing the total allocation to ₹1.22 lakh crore. The primary enhancements include a substantial increase of ₹4.7 thousand crore for the Pradhan Mantri Annadata Aay Sanrakshan Yojana (PM-AASHA), aimed at securing Minimum Support Prices (MSP) for farmers. Additionally, there is an increase of ₹300 crore for the distribution of pulses to states and union territories for welfare schemes. This latter initiative focuses on the strategic disposal of chana procured under the Price Support Scheme (PSS), utilizing it for various welfare projects.
Department of Consumer Affairs : Revenue + ₹10,000 Crore
The entire increase in funding for the Department of Consumer Affairs has been allocated to a single item: the Price Stabilization Fund. This provision is dedicated to maintaining buffer stocks of pulses, onions, and potatoes. The objective is to ensure the adequate availability of these essential commodities in the market, enabling timely intervention to moderate prices as necessary.
Ministry of Corporate Affairs : Revenue + ₹2,000 Crore
The Ministry of Corporate Affairs has received an increase of ₹2,000 crore, exclusively earmarked for a new internship program announced by the government to boost employment across the country. This infusion represents a significant portion of the ministry's total allocation, which stands at ₹2,667 crore, underscoring the government's commitment to enhancing job opportunities through this initiative.
Department of Economic Affairs : Revenue + ₹ 4551 & Capital - ₹ 7855 Crores
The primary source of the revenue increase in the Department of Economic Affairs stems from the Gold Reserve Funds, with allocations rising from ₹4,000 crore to ₹8,551 crore. Conversely, the decrease in capital expenditure is attributed to cuts in a new scheme, reducing the budget from ₹70,448 crore to ₹62,593 crore.
Ministry of Electronics and Information Technology: Revenue + ₹552 Crores
The primary adjustment in the Ministry’s budget includes an allocation of ₹551.75 crore for the newly approved "IndiaAI Mission." Initiated on March 7, 2024, this national program aims to enhance India's AI ecosystem by democratizing AI innovation, fostering public-private partnerships, and promoting ethical, inclusive growth. The mission encompasses seven key components: IndiaAI Compute Capacity, Innovation Centre, Datasets Platform, Application Development Initiative, FutureSkills, Startup Financing, and Safe and Trusted AI.
Additionally, a modest allocation of ₹2 crore supports the Data Protection Board, established under the Digital Personal Data Protection Act of 2023, to cover salaries and operational costs.
Ministry of Finance - Interest Payments: Revenue - ₹27,500 Crores
The reduction in the interest payment budget by the central government encompasses several categories: a) market loans, b) short-term instruments like Treasury Bills, c) interest on the Sovereign Gold Bond scheme of 2015 and prepayment premiums for debt reduction, and d) interest on small savings deposit certificates and operational expenses. The largest savings, amounting to ₹12,000 crore, originate from market loans. The second category contributes a saving of ₹9,300 crore. Category c results in an outflow of ₹1,500 crore, while category d anticipates savings of ₹5,500 crore.
In summary, the government is forecasting reduced interest outflows on short-term instruments and market loans, anticipating a decline in interest rates in the coming months. This expectation carries risks due to persistent high inflation and the U.S. Federal Reserve's ongoing stance on interest rates, which could impact the stability of the rupee.
Ministry of Finance - Transfer to States: Revenue + ₹16,000 & Capital + ₹20,000 Crores
The Ministry of Finance has implemented significant budgetary increases under two distinct categories. Firstly, Special Assistance has seen a substantial rise in revenue allocation from ₹4,000 crore to ₹20,000 crore. This increase is intended to cover spill-over committed liabilities that were not previously budgeted, as well as to provide other need-based assistance to the states. Secondly, there is an enhancement in the capital budget for Special Assistance as a Loan to States for Capital Expenditure, which has been increased by ₹20,000 crore, bringing the total from ₹1.3 lakh crore to ₹1.5 lakh crore. This capital is earmarked to support states in funding their capital expenditures, fostering infrastructural and developmental growth.
Ministry of Heavy Industries : Revenue + ₹513 Crores
The Ministry of Heavy Industries has allocated most of this increased funding to a new initiative, the Electric Mobility Promotion Scheme-2024, with a budget of ₹500 crore. This scheme is designed to boost the adoption of electric two-wheelers and three-wheelers across India, targeting both commercial and select private uses. Specifically, the scheme supports the deployment of 372,215 electric vehicles, including 333,387 two-wheelers and 38,828 three-wheelers, the latter encompassing 13,590 rickshaws and e-carts, as well as 25,238 vehicles in the L5 category.
An additional ₹13 crore has been allocated to the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SMEC). This initiative aims to draw investments from global electric vehicle manufacturers, positioning India as a key production hub for electric vehicles. It seeks to enhance India’s global stature in EV manufacturing, spur job creation, and further the "Make in India" agenda. Approved participants in this scheme are expected to establish manufacturing operations with a minimum investment of ₹4,150 crore (approximately USD 500 million), achieving a Domestic Value Addition of 25% within three years and 50% within five years from approval.
Ministry of Home Affairs - Transfer to Jammu & Kashmir: Revenue + ₹5,000 Crore
The Ministry of Home Affairs has boosted its allocation to Jammu & Kashmir by ₹5,000 crore under the category of Central Assistance to Union Territories. This increase raises the total from ₹35,619 crore to ₹40,619 crore. The additional funds are intended to bridge the resource gap in the Union Territory. Additionally, the provision includes a sum of ₹7,900 crore, initially sanctioned as an advance from the Contingency Fund of India. This amount will be recouped to the Contingency Fund after the Demands for Grants for 2024-2025 are approved by Parliament and the related Appropriation Act receives presidential assent.
Ministry of Housing and Urban Affairs - Revenue + ₹5,051 Crores
The Ministry of Housing and Urban Affairs has allocated additional funds across several new initiatives. A significant allocation of ₹1,000 crore has been dedicated to identifying four academic institutions as Centers of Excellence in Urban Planning/Design. This initiative aims to enhance educational and research capabilities in urban development.
Further allocations include ₹3,000 crore to the Credit Linked Subsidy Scheme (CLSS) I, targeting the Economically Weaker Section (EWS) and Lower Income Group (LIG). This scheme provides interest subsidies on housing loans to support affordable housing for these demographics. Additionally, the CLSS II, aimed at the Middle Income Group (MIG), has received an increase of ₹1,051 crore to continue providing similar interest subsidies for housing loans.
These targeted increases reflect the Ministry’s commitment to improving urban infrastructure and expanding access to affordable housing across different income groups.
Ministry of Labour and Employment - Revenue + ₹10,000 Crores
The Ministry of Labour and Employment has allocated an additional ₹10,000 crores entirely to a newly introduced category, the New Employment Generation Scheme. This initiative is designed to stimulate job creation nationwide, reflecting the government's commitment to enhancing employment opportunities across various sectors.
Ministry of New and Renewable Energy - Revenue + ₹6250 Crores
The Ministry of New and Renewable Energy has seen a significant revenue increase with numerous new budget items introduced. Due to these additions, it is challenging to precisely identify under which specific heads the allocations have been increased, as there is a noticeable lack of continuity with the budget items outlined in February 2024.
Ministry of Petroleum and Natural Gas - Revenue + ₹493 & Capital - ₹14,279 Crores
The Ministry of Petroleum and Natural Gas has notably withdrawn all capital support previously allocated to Oil Marketing Companies, which amounted to ₹14,279 crores. This significant reduction has reduced the capital support to nil under the centrally supported schemes category.
Ministry of Skill Development and Entrepreneurship - Revenue +₹1000 Crores
The Ministry of Skill Development and Entrepreneurship has allocated an additional ₹1,000 crores exclusively to a newly introduced item, the New ITI Upgradation Scheme. This initiative is aimed at enhancing the infrastructure and educational capabilities of Industrial Training Institutes (ITIs) across the country.
Conclusion
The July 2024 budget, compared to the interim budget of February 2024, shows a modest increase in revenue expenditure by ₹55,000 crore, while capital expenditure remains unchanged at ₹11.11 lakh crore. This stability in capital spending reflects a strategic redistribution rather than any significant new investments. The detailed review highlights the government's shifted focus, primarily towards employment generation, which despite being prominently featured in the Finance Minister's speech, has not seen proportional funding. This disparity raises questions about the practical impact of the policy intentions.
No notable changes were made to flagship schemes like the PLI or adjustments in other budgetary areas from the February 2024 budget, suggesting a conservative approach amidst the changed political dynamics of a coalition government. These budgetary decisions provide a clear window into the government's current priorities and the practical challenges of aligning ambitious policy announcements with fiscal reality.
Through this budget analysis, readers can discern the nuances of governmental focus and the tangible commitment to announced policies, offering a basis to gauge the seriousness and potential impact of these initiatives under the new political configuration.