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Interim Budget 2024: What to expect?

by Angelina

An Interim Budget is presented in the election year, covering the period until a new government takes office. It serves as a temporary budget to meet the government’s expenditure needs until a full-fledged budget is presented by the incoming administration. Finance Minister Nirmala Sitharaman will announce the Interim Budget on February 1. Since the upcoming budget is a Vote on Account the primary focus will be on the expenditure of the government until a new government takes over after the General Elections.

According to ICICI Direct’s research team, the Interim Budget could include the following-

  1. The fiscal deficit is likely to be contained to 5.3. Due to lower spends and higher than expected tax collection, the fiscal deficit is likely to be reduced from 5.3 for the Interim Budget 2024.
  2. Capex us expected to grow and sustain at mid to high teen. Focus might shift to newer part of Capex such as Railways including stations, wagons, etc.
  3. Corporate tax system has gone through some tweaking, however, there have been no changes in Direct Tax. Since this is an Interim Budget, it is unlikely that any major changes in the tax system will be announced. We can expect more clarity in the Union Budget after the General Elections.
  4. Harmonisation of taxation between debt and equity is an area of focus for the government which could be included in the budget.
  5. Industry specific measures for industries such as renewables, green hydrogen, etc. might be announced. There might be updates or incentive push for these industries and schemes such as FAME.

While it lacks, the comprehensive nature of a regular budget, it provides a crucial financial roadmap during the transitional period, ensuring continuity in governance and public spending. It is unlikely that any significant policy changes will be announced on February 1, 2024. However, the listed changes are likely to be included in the Interim Budget 2024.

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