FM Sitharaman Concludes Consultation Meetings; All Eyes Now On Union Budget 2024-25
The pre-budget consultations started on 19 June 2024 in the Ministry of Finance and were chaired by Nirmala Sitharaman
The pre-budget consultations for the union budget 2024-25 that started on 19 June 2024 under the chairmanship of Union Finance Minister Nirmala Sitharaman concluded on 5 July 2024. During the in-person consultations, more than 120 invitees across ten stakeholder groups, including experts and representatives from farmer associations and agriculture economists; trade unions; education and health sector; employment and skilling and MSME among others participated in the meetings.
In the course of the consultations, Sitharaman thanked the participants for sharing valuable suggestions and assured experts and representatives that their suggestions would be carefully examined and considered while preparing the budget 2024-25. Notably, under the Narendra Modi 3.0 government, Sitharaman will present the FY 2024-25 full budget to the Lok Sabha on 23 July.
Parliamentary Affairs Minister Kiren Rijiju took to social media site X (formerly Twitter) and wrote, “Hon’ble President of India, on the recommendation of Government of India, has approved the proposal for the summoning of both the Houses of Parliament for the Budget Session, 2024 from 22nd July 2024 to 12 August 2024 (subject to exigencies of Parliamentary business). Union Budget, 2024-25 will be presented in Lok Sabha on 23 July 2024.”
Having been chosen to the position of Union Finance Minister for a second term in a row, Sitharaman will be the first person to present seven Union Budgets in a row. Before the elections of 2024 Lok Sabha, she presented the interim budget. While presenting this, she will be surpassing Morarji Desai's record of six.
The issue in focus for upcoming budgets will be whether the angle tax be removed or not. The Department for Promotion of Industry and Internal Trade (DPIIT) has suggested eliminating the controversial angel tax for startups and Karnataka's IT/BT Minister Priyank Kharge also has raised the issue. He tweeted in May referring to how startups have “begged & pleaded” to remove ‘angel tax’ to boost startup investments.
Industry Expectations
In the pre-union budget 2024 meeting with Sitharaman, industry body Assocham has suggested that the government should focus strategically on capital expenditure, prioritising investment in infrastructure, education and healthcare. ‘’By prioritising investments in infrastructure, education, healthcare, and other critical sectors, governments can stimulate economic growth while maintaining fiscal discipline.” Sanjay Nayar, President, Assocham said.
Another key area of focus, Nayar said, should be the micro, small and medium enterprises (MSMEs. There is a pressing need to establish a dedicated working group tasked with identifying underperforming schemes related to MSMEs. Such an initiative would systematically assess the effectiveness of current programs, pinpointing areas where interventions are falling short in supporting MSMEs.
In response to the surging shipping rates triggered by Covid-19 and the Red Sea crisis, exporters have urged the Indian government to develop Indian shipping lines of global repute to boost exports. Federation of Indian Export Organisations (FIEO) President Ashwani Kumar proposed that the government extend the Interest Equalisation Scheme (IES) for five years to compensate exporters for a portion of the interest on loans. He emphasised that developing an Indian shipping line could significantly reduce the country’s outward remittance on transport services, which totalled over USD 109 billion in 2022.
“We request a focus on developing an Indian shipping line of global repute. India’s outward remittance on transport services is increasing with rising exports. As the country moves towards the goal of USD 1 trillion in goods exports, this will touch USD 200 billion by 2030. A 25 per cent share by the Indian shipping line can save USD 50 billion annually. This will also reduce arm-twisting by foreign shipping lines, particularly of our micro, small, and medium enterprises (MSMEs),” Kumar stated at the meeting.
During the meeting, health experts emphasised the need to increase the availability of hospital beds in the country. They pointed out that the current bed availability is significantly below World Health Organisation (WHO) standards. "We have presented to the government the data that there are less than two beds per thousand population in our country, while WHO requires that there should be 3.5 beds per thousand population. Over and above, we have told them that there is a great disparity in terms of bed density," said Girdhar Gyani, Director General, Association of Healthcare Providers.
The experts also noted that in regions like Bihar, the lack of available beds forces patients to travel long distances for treatment. "Karnataka has got 4.2 beds per 1,000 population, while Bihar has got only 0.3 beds per 1,000 population. So this makes Bihar population travel for treatment," Gyani explained. Additionally, the experts proposed that certain adult vaccines, such as the influenza vaccine and the cervical cancer vaccine for women, should be provided at subsidised costs.
Enhancing Ease Of Doing Business
In a series of pre-budget consultations, industry leaders from the Confederation of Indian Industry (CII), the PHD Chamber of Commerce and Industry (PHDCCI), and the Federation of Indian Chambers of Commerce and Industry (FICCI) presented a slew of recommendations aimed at bolstering economic growth, enhancing ease of doing business, and fostering sustainable development.
The meetings with Revenue Secretary Sanjay Malhotra and his team highlighted key areas for government focus in the upcoming Union Budget. The Confederation of Indian Industry (CII) emphasised the need for a significant increase in government capital expenditure, proposing a 25 per cent rise compared to the 16.8 per cent increment outlined in the interim budget.
The CII's focus is on creating rural infrastructure, including irrigation systems, warehousing, and cold chain facilities, to support agricultural productivity and rural economic growth. CII suggested, "To boost consumption demand in the short term, steps such as providing a marginal relief in income tax at the lower end of the spectrum with taxable income upto Rs 20 lakhs; reduction in excise duties on Petrol and Diesel: upward revision of minimum wages of MNREGA; raising DBT amount under PM Kisan".
In a meeting with leading economists, the discussions focused on critical issues such as boosting capital expenditure and reducing the fiscal deficit. During the consultation, they emphasised that the fiscal deficit will be further reduced in the upcoming budget, and the government is concentrating on policies to generate employment growth.
"The government has shown fiscal prudence and has controlled fiscal deficit. This time, revised estimates also show positive indications. The government has already stated that the fiscal deficit will be lower in the budget. At the same time, employment remained an important issue of discussion" said Ashwani Mahajan, National Co-convener of the Swadeshi Jagaran Manch. On the demand for granting special status to some states, Mahajan added, “There's nothing on special status for states. The government is already doing a lot on capital expenditure, with at least more than 3 per cent of GDP being spent on it.”
