Union Finance Minister Nirmala Sitharaman.
| Photo Credit: PTI

The government is likely to introduce amendments to Banking Regulation Act 1949 and other laws to push banking sector reforms during the upcoming Budget session.

Apart from this, amendments in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 are needed for privatisation of public sector banks, sources said.

These Acts led to the nationalisation of banks in two phases and provisions of these laws have to be changed for the privatisation of banks, they said.

Amendments, if approved by Parliament, would help bring down government holding in state-owned banks below 51%, improve bank governance and enhance investors’ protection, sources said.

Parliament session beginning on July 22 would witness the Budget presentation on July 23 and conclude with the passage of the Finance Bill on August 12.

It is to be noted that the government had listed amendment to these laws to be taken up during the winter session in 2021, but these bills could not be tabled.

“To effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two Public Sector Banks,” as per the list of legislative business for the winter session.

Finance Minister Nirmala Sitharaman, while presenting the Budget for 2021-22, announced the privatisation of public sector banks (PSBs).

“Other than IDBI Bank, we propose to take up the privatisation of two PSBs and one general insurance company in 2021-22,” she had said.

To ensure privatisation of a general insurance company, the government has already received approval from Parliament for the General Insurance Business (Nationalisation) Amendment Bill, 2021, in the monsoon session ended in August 2021.

The government in April 2020 consolidated 10 PSBs into four and as a result, the total number of PSBs came down to 12 from 27 in March 2017.

As per the amalgamation plan, the United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank, making the proposed entity the second-largest PSB.

Syndicate Bank was merged with Canara Bank, while Allahabad Bank was subsumed in Indian Bank. Andhra Bank and Corporation Bank were amalgamated with the Union Bank of India.

In a first three-way merger, Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019. SBI had merged five of its associate banks — State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, and State Bank of Hyderabad — and also Bharatiya Mahila Bank effective April 2017.

Congress president Mallikarjun Kharge. File
| Photo Credit: ANI

Congress president Mallikarjun Kharge on July 12 said that Prime Minister Narendra Modi “used PR” to keep the government away from basic issues but people were now demanding accountability after the June Lok Sabha poll results.

Mr. Kharge took a swipe at the Prime Minister, saying that while he is holding meetings under the shadow of cameras for the upcoming budget, he must pay attention to the basic economic issues of the country.

In a post in Hindi on X, the Congress president said, “Narendra Modi ji, Your government has ruined the lives of crores of people by pushing them into the pit of unemployment, inflation and inequality.” Listing the “failures” of the government, Kharge said that due to the unemployment rate of 9.2 per cent, the future of the youth is staring at naught.

“For people aged 20-24 years, the unemployment rate has risen to 40%, highlighting the serious crisis in the job market among the youth,” Mr. Kharge said.

The promise of doubling the income of farmers and MSP of cost plus 50 per cent has turned out to be false, he said.

Recently, on the MSP of 14 Kharif crops, the Modi government has again proved that it wants to use the MSP recommendation of the Swaminathan report only as an “election gimmick”, he claimed.

The Congress leader said, “3.84 lakh government jobs have been lost in the 7 PSUs in which the majority of government stake has been sold! This has also led to the loss of jobs for SC, ST, OBC, EWS reserved posts”.

He said 1.25 lakh people have lost government jobs in the 20 top PSUs in which the Modi government has sold a small stake since 2016.

Manufacturing as a percentage of GDP has fallen from 16.5 per cent during the UPA regime to 14.5 per cent during the Modi government, he pointed out.

“Private investment has also fallen drastically in the last 10 years. New private investment plans, which are an important part of GDP, fell to a 20-year low of only ₹44,300 crore between April and June. Last year, private investment of ₹7.9 lakh crore was made during this period,” he said.

Mr. Kharge also alleged that the havoc of inflation is at its peak.

The prices of flour, pulses, rice, milk, sugar, potatoes, tomatoes, onions, and all essential food items are skyrocketing, he noted.

The result is that the household savings of families are at the lowest level in 50 years, he added.

Mr. Kharge said that economic inequality is the highest in 100 years, while wage growth in rural India is negative.

“Unemployment has increased significantly in rural areas and it has now increased from 6.3% in May to 9.3%. The average number of days of workers employed in MNREGA has decreased,” he said.

“Modi ji, It has been 10 years, you used your PR to keep the government away from the basic issues of the people, but after June 2024, this will not work anymore, the public is now demanding accountability,” Mr. Kharge said.

The arbitrary tampering with the country’s economy must now stop, he added.

More tax benefits for health insurance under the new tax regime, relaxation in payment norms for MSMEs and incentives for the agri-tech sector are among the expectations of stakeholders from the first budget of the Modi 3.0 government.

Finance Minister Nirmala Sitharaman is scheduled to present the full Budget for fiscal 2024-25 on July 23, which will be the first major policy document of the new government.

Click here for more 2024-25 Budget related updates

Anup Rau, Managing Director and Chief Executive Officer of Future Generali India Insurance Company, said the deduction limit on health insurance premiums under Section 80D of the Income Tax Act has remained unchanged for the past nine years despite the fact that there has been a significant rise in healthcare costs across the country.

“It would be best if the limit for medical insurance is linked to inflation and gets revised automatically every year or once in a couple of years. Also, the benefits need to be extended to the New Tax regime since increasing health insurance penetration is critical. So, we hope the upcoming Budget to announce some hike in the deduction limit on health insurance premiums,” Rau said.

Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, said reforms like offering health insurance to employees at negotiated rates, reducing GST on health insurance premiums, and offering tax benefits like increased Section 80D exemption limits would make health insurance more affordable and accessible, especially for the ‘missing middle’ segment of our population.

“Additionally, for senior citizens, removing the limit on deductions for health insurance premiums would significantly ease their financial burden,” Mr. Singhel said.

The Finance Minister is likely to lay out the government’s economic agenda in the budget.

On expectations from the Ms. Sitharaman’s budget, D S Negi, CEO of Rajiv Gandhi Cancer Institute & Research Centre (RGCIRC), said the focus on reforming cancer care in India is crucial and it is important to prioritise funding for advanced treatments like immunotherapy and personalised medicine, ensuring more patients can access these cutting-edge therapies.

“Extending Ayushman Bharat to those aged above 70 years will be highly beneficial for senior citizens. However, the current coverage limit of ₹5 lakh may not be sufficient for critical illnesses such as cancer, where treatment costs can range from ₹15-20 lakh.

“Therefore, it is essential to consider increasing the coverage limit for critical illnesses like cancer to ensure adequate financial support for cancer patients,” Mr. Negi added.

The budget is likely to include steps to fast-rack reforms to make India a USD 5-trillion economy in the near future and turn the country into a ‘Viksit Bharat’ by 2047.

Ahead of the budget, Chairman of the Medical Technology Association of India (MTaI) Pavan Choudary said that customs duties and taxes levied on medical devices in India are one of the highest in the world which directly impacts patient affordability.

“On the other hand, countries like Singapore, Hong Kong, Italy, and Norway impose no such duties. Australia and Japan levy only a minimal 0.5 per cent duty, while in the United States, it stands at 2 per cent, and in China at 3 per cent.

“This stark contrast creates risk for illegal imports of medical devices in India that are not backed by legal and service guarantees. Furthermore, such trade would undercut the Indian government’s tariff revenue,” he said.

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, said as per recommendations of Micro, Small & Medium Enterprises (MSMEs), Section 43B(h) in the Income Tax Act was introduced from AY 24-25. However, the alignment of the disallowance for payables under sections 43B(h) of the Act has been made with the MSME Act, which requires that payment has to be made to an SME within a maximum of 45 days.

“This is difficult in the present-day trade where a 60-90 days credit period is the norm.

“In this budget, it is expected that this provision will be relaxed/amended aligning the same with the CGST Act w.r.t. disallowance when payment to SMEs is not made within 180 days. Hence, in case a taxpayer does not pay an SME within 180 days, then the expense may be added back to his income,” he said.

In anticipation of the budget, Saurabh Rai, CEO of Arahas, has expressed high expectations for substantial investments in sustainability and geospatial technology.

“We anticipate significant allocations towards renewable energy projects and incentives for companies embracing green technologies,” he said.

Additionally, Rai said that boosting agri-tech innovations, providing tax incentives for tech companies and investing in human capital development is imperative for driving sustainable growth.

Sanjay Kumar, Founder and CEO of Geospatial World, said that to fully leverage the power of digital twin technology, it is crucial to allocate dedicated funds to it in the Union Budget.

“This allocation will facilitate the widespread adoption of digital twins, driving efficiency gains, cost savings, and improved decision-making in infrastructure projects. By investing in this technology, India can achieve significant long-term benefits, such as enhanced asset management, reduced downtime, and increased resilience to environmental challenges,” Mr. Kumar said.

Ms. Sitharaman was given charge of the finance portfolio in the second stint of the Modi government after the 2019 general elections, becoming the first full-time woman Finance Minister in independent India.

Prime Minister Narendra Modi addresses a meeting with economists ahead of the Union budget which will be presented on July 23, in New Delhi on July 11, 2024. Union Finance Minister Nirmala Sitharaman is also present.
| Photo Credit: ANI

Prime Minister Narendra Modi is meeting eminent economists on July 11 to elicit their views and suggestions for the upcoming Budget, a senior government official said.

Union Finance Minister Nirmala Sitharaman is scheduled to present the Budget for 2024-25 in the Lok Sabha on July 23.

Also Read | Union Budget should focus on fiscal prudence, tax restructuring, agriculture reforms: SBI Research

Besides economists and sectoral experts, Niti Aayog Vice Chairman Suman Bery and other members also attended the meeting.

Finance Minister Sitharaman, Planning Minister Rao Inderjit Singh, Chief Economic Advisor V. Anantha Nageswaran and economists Surjit Bhalla and Ashok Gulati and veteran banker K.V. Kamath among others were present in the meeting.

The Budget for 2024-25 will be the first major economic document of the Modi 3.0 government, which, among other things, is expected to lay the road map for making India a developed nation by 2047.

President Droupadi Murmu, in her address to the joint sitting of Parliament last month, had indicated that the government would come out with historic steps to accelerate the pace of reforms.

She also said the Budget will be an effective document of the government’s far-reaching policies and futuristic vision.

Ms. Sitharaman has already held discussions with various stakeholders, including economists and captains of Indian industry, on the forthcoming Budget.

Several experts have urged the government to provide tax relief to the common man to boost consumption and take steps to check inflation and accelerate economic growth.

The economy has recorded a growth rate of 8.2% in 2023-24.

Earlier in February, Ms. Sitharaman presented an interim budget for 2024-25 in view of the Lok Sabha elections.

Union Minister of Finance and Corporate Affairs Nirmala Sitharaman chairs the eighth Pre-Budget consultation with representatives of the Employment and Skilling division. File.
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman has concluded consultations with various stakeholders, including representatives of industry and social sectors, as part of the budget preparation exercise.

Ms. Sitharaman will present her seventh Budget on July 23. This would be the first full budget of Modi 3.0 which is going to set the path for Vikshit Bharat (developed India) by 2047.

Also read | Govt said to plan raise in rural housing subsidies by 50% after election setback

Last month, President Droupadi Murmu, while delivering her address to the joint sitting of Parliament, had said that many historic steps and major economic decisions will be taken in the upcoming budget session.

In her first address to the joint sitting of Parliament since the constitution of the 18th Lok Sabha, the President said, “This budget will be an effective document of the government’s far-reaching policies and futuristic vision”.

“Along with major economic and social decisions, many historic steps will also be seen in this budget,” she said.

The Finance Ministry in a statement said the pre-budget consultations for Union Budget 2024-25 that started from June 19 onward concluded on July 5, 2024.

In the course of in-person consultations, more than 120 invitees across 10 stakeholder groups, including experts and representatives from farmer associations and agriculture economists; trade unions; education & health sector; employment & skilling; MSME; trade & services; industry; economists; financial sector & capital markets; as well as, infrastructure, energy and urban sector, participated in the meetings, it said.

These meetings chaired by the Finance Minister witnessed the participation of Minister of State for Finance Pankaj Chaudhary; Finance Secretary and Secretary Expenditure, T V Somanathan; Economic Affairs Secretary, Ajay Seth, DIPAM Secretary, Tuhin K Pandey, Financial Services Secretary Vivek Joshi and Revenue Secretary, Sanjay Malhotra among others.

In the course of the consultations, Sitharaman expressed gratitude to the participants for sharing valuable suggestions and assured experts and representatives that their suggestions would be carefully examined and considered while preparing the Union Budget 2024-25.

Budget session of Parliament will be held from July 22 to August 12, said Union Parliamentary Affairs Minister Kiren Rijiju

Union Parliamentary Affairs Minister Kiren Rijiju, on July 6, said that the Budget session of Parliament will be held from July 22 to August 12. Mr. Rijiju added that the Union Budget 2024-25 will be presented on July 23.

Mr. Rijiju in his X (formerly Twitter) post said “Hon’ble President of India, on the recommendation of Government of India, has approved the proposal for 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.”

After the general elections 2024, a special session of Parliament was held from June 24. The new Members of Parliament took oath and President Droupadi Murmu addressed the joint session of Parliament on June 27.

The full Budget for the year 2024-25 will be presented on July 23, with the Parliament session beginning a day earlier, Union Minister Kiren Rijiju announced on Saturday.

The Parliamentary Affairs minister said the Budget session will begin on July 22 and is scheduled to end on August 12.

Hon’ble President of India, on the recommendation of Government of India, has approved the proposal for 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,…

— Kiren Rijiju (@KirenRijiju) July 6, 2024

“Hon’ble President of India, on the recommendation of Government of India, has approved the proposal for 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,” the minister posted on X. 

Finance Minister Nirmala Sitharaman had presented the interim Budget in February in view of the upcoming Lok Sabha elections. She will be presenting her seventh consecutive Budget, becoming the first finance minister in India’s history to do so, surpassing the previous record set by Morarji Desai.

This will be the first Budget presented during Narendra Modi’s third term as Prime Minister and also the first under him in which the BJP does not have a majority on its own. 

Expectations from the Budget have been high and were fuelled further when President Droupadi Murmu said in her joint address that it will see “many historic steps” and accelerate the pace of reforms. 

“This Budget will be an effective document of the government’s far-reaching policies and futuristic vision. Along with major economic and social decisions, many historic steps will also be seen in this Budget… “The pace of reforms will be further accelerated in tune with the aspirations of people of India for rapid development,” she had said on June 27.

For the middle and salaried classes, one of the biggest expectations is that there will be a change in the income tax structure which will leave more disposable income in their hands.

Stormy Session?

The special session of the Parliament, the first in the 18th Lok Sabha, witnessed stormy scenes with the strengthened opposition looking to make its presence felt under the new Leader of the Opposition in the House, Rahul Gandhi. In the general elections, the results for which were declared on June 4, the INDIA alliance won 232 seats and restricted the BJP to 240. The NDA, though, has a comfortable majority with 293 MPs.

The NEET paper leak exam issue, Manipur, Emergency, Agnipath scheme and the alleged abuse of the Constitution by the ruling dispensation dominated the special session and are likely to make their presence felt in the Budget session as well.  

Union Finance Minister Nirmala Sitharaman.
| Photo Credit: PTI

States have urged the Centre to make some improvements in the 50-year interest free loan scheme for pursuing capital investment projects, under which the Union government has proposed to give them ₹1.3 lakh crore this year, the same amount as 2023-24.

Ministers from States made suggestions related to the ‘Scheme for Special Assistance to States for Capital Investment’, first launched in 2020-21, during pre-Budget consultations chaired by Union Finance Minister Nirmala Sitharaman on June 22.

Ms. Sitharaman also heard out several suggestions from State Ministers regarding the Union Budget 2024-25 likely to be presented next month, along with requests specific to their regions, and assured them that their ideas and inputs will get “due consideration by the Union Government during the preparation of Union Budget 2024-25”.

Apart from Finance Ministers from several States, the meeting was attended by the Chief Ministers of Goa, Meghalaya, Mizoram, Nagaland, and Sikkim, along with the Deputy Chief Ministers of Bihar, Madhya Pradesh, Odisha, Rajasthan and Telangana.

“In her remarks, the Union Finance Minister underlined Union Government’s support to States through timely tax devolution, Finance Commission grants, and arrears of GST Compensation being provided for providing stimulus to growth,” the Finance Ministry said in a statement.

On the ‘Scheme for Special Assistance to States for Capital Investment’, Ms. Sitharaman iterated that while most of the loans under it are untied, a part of the allocation is conditional and linked to citizen-centric reforms by States and sector-specific capital projects. She requested the States to avail these loans by fulfilling those requisite criteria.

Union Finance Minister Nirmala Sitharaman chairs the pre-Budget meeting with Finance Ministers of all States and Union Territories in New Delhi on June 22, 2024.
| Photo Credit: PTI

Union Finance Minister Nirmala Sitharaman chaired a pre-budget meeting with Finance Ministers of all States and Union Territories on June 22 to take suggestions for the upcoming Union Budget 2024-25.

The Union Finance Ministry began consultations on the Budget with different stakeholders a few days ago.

On June 19, Ms. Sitharaman chaired the first pre-Budget consultation meeting, which was attended by Union Minister of State for Finance Pankaj Chaudhary, the finance secretary, secretaries of the departments of economic affairs, revenue, financial services and corporate affairs and the chief economic adviser. She met economists, finance and capital market experts and industry bodies.

Meanwhile, Ms. Sitharaman will also chair the 53rd Goods and Services Tax (GST) Council Meeting, the first meeting after the formation of the new government, later today. State Finance Ministers will attend the meeting. As is the norm, the GST Council gets together to discuss issues pertaining to the GST regime, such as tax rates, modifications to policies, and administrative challenges. The Council is a key player in shaping India’s indirect tax system.

The information on the agenda for the meeting is not yet in the public domain, but, the decisions and recommendations arising from the 53rd GST Council meeting will be closely watched by various stakeholders are keenly watching the meeting as it has the potential to influence taxation, trade, and the economy overall.

The Goods and Services Tax was introduced in the country with effect from July 1, 2017, and states were assured compensation for loss of any revenue arising on account of the implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for five years.

India’s Finance Minister Nirmala Sitharaman during the Vibrant Gujarat Global Summit in Gandhinagar, Gujarat, India, on Thursday, Jan. 11, 2024. 
| Photo Credit: Bloomberg

The Finance Minister presented her sixth budget today. Her announcements ranged from railways, tourism, healthcare, technology, aviation, green energy, aquaculture, housing, and more. With regards to taxation, no changes were announced to the tax structure of direct and indirect taxes, and import duties. Meanwhile, startups and investments made by sovereign wealth or pension funds were given an extended tax exemption till March 31, 2025.

Budget 2024 live updates

Besides this, here are the charts that show key numbers from the interim Budget 2024:

Budget at a glance

The Finance Minister said that the Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh crore. The Revised Estimate of the total expenditure is Rs 44.90 lakh crore. The revenue receipts at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalization in the economy.

Capital Expenditure

Capital expenditure outlay was raised to ₹11.1 lakh crore for FY25 from the ₹9.5 lakh crore in the previous fiscal. The proportion of capital expenditure (excluding grant in aid) to total expenditure stands at 23.31%. This is in line with the trend of increasing capital expenditure in the past few years. Capital expenditure means the government’s spending on durable assets like the construction of infrastructure.

In 2024-25, the total expenditure is estimated at ₹ 47.66 lakh crore, a 6.1% increase over the revised estimates of 2023-24.”

Fiscal Deficit

The budget estimates for the fiscal deficit for FY 25 was pegged at 5.1%, down from the revised estimates of 5.8% last fiscal year. The fiscal deficit is the difference between the government’s revenues and expenditure. It is financed by money from various sources like market borrowings, small savings, dated securities and others. The government has set a target of 4.5% fiscal deficit by 2025-26.

Rupee come from

Borrowings and other liabilities account for the largest avenue from where the Budget money comes, followed by income tax and GST & other taxes.

Rupee goes to

When it comes to expenditure, the highest amount goes towards paying interest and the money given to the states in the form of taxes and duties, accounting for 20 per cent each of the total expenditure.

State-wise allocation of central taxes and duties

Here is the state-wise distribution of net proceeds of Union Taxes and Duties for Budget Estimates 2024-25. 

Allocation to Ministries

The Union Budget allocated a massive ₹6.21 lakh crore for the Defence Ministry, followed by Road Transport & Highways with ₹2.78 lakh crore and Railways with ₹2.55 lakh crore.

Outlay for Major Schemes

The Union Budget 2024-25 listed the allocations for core welfare schemes that drive socio-economic development.

Here is the allocations for major central government sponsored schemes:

Railway Budget in a Glance

Railway projects have been identified under the PM Gati Shakti Yojana for enabling multi-modal connectivity. These will “improve logistics efficiency and reduce costs,” said Ms. Sitharaman.

Touching upon measures that will be taken to expand India’s railway infrastructure, three major railway economic corridors were announced. These include an energy, mineral and cement corridor, a port connectivity corridor and a high traffic density corridor. Ms. Sitharaman emphasised that these corridors, along with dedicated freight corridors, will “accelerate our GDP and reduce logistic costs.”

Health Expenditure

The expenditure for the dept. of health & family welfare for FY25 is Rs. 10,000 crores more than the revised estimates of the current FY. But the allocation to the Union Ministry of Health is estimated to be 1.9% of the total expenditure, continuing the trend of staying below the 2% mark since 2022-23.

Also read |Understanding the formulation of the Budget