Fiscal Consolidation

• Fiscal Deficit Target: The budget sets a fiscal deficit target of 4.9% of GDP for the fiscal year 2024-25, with a goal to gradually reduce it to 4.5% in subsequent years. This indicates the government''s commitment to fiscal discipline despite the challenges faced by the economy.
• Debt to GDP Ratio: The forecasted reduction in the central government''s debt to GDP ratio from 58.2% to 56.8% underscores efforts to manage public debt responsibly. This reduction is seen as a positive step towards maintaining economic stability and investor confidence.
• Source of Fiscal Space: The surplus expected from the Reserve Bank of India (RBI) is highlighted as a significant contributor to additional fiscal space. This surplus will not only aid in fiscal consolidation but also in funding developmental initiatives without compromising fiscal prudence.

Medium-Term Interventions

• Economic Policy Framework: The proposal to establish a comprehensive economic policy framework is aimed at providing clarity and consistency in economic reforms over the medium term. This framework is expected to guide future policy decisions and reforms, enhancing predictability for investors and stakeholders.
• Employment and Skilling Initiatives: Recognizing the importance of employment generation and skill development, the budget outlines initiatives to improve employability through skill training programs. Additionally, financial support for provident fund contributions aims to benefit workers and encourage savings.
• Infrastructure Development: The budget emphasizes infrastructure development as a crucial pillar for economic growth. Investments in infrastructure projects, including roads, railways, and airports, are intended to stimulate economic activity and address long-term developmental challenges.

Tax Reforms

• GST Rationalization: There is a proposal to rationalize GST rates and expand the tax base. This move aims to simplify the GST structure, reduce compliance burdens, and enhance revenue collection efficiency. The stability and predictability of the GST regime are expected to improve through ongoing reforms.
• Customs Duties: The continual recalibration of customs duties is mentioned to address varying economic concerns effectively. An economic policy framework could provide stability and clarity in customs duty policies, promoting trade and economic growth.
• Direct Taxes: The budget highlights a review of the Income Tax Act to make it concise, easy to understand, and reduce litigation. The introduction of the "Vivad se Vishwas, 2024" scheme aims to resolve tax disputes and unlock revenue locked in litigation, thereby improving tax administration and compliance.
• Capital Gains Tax: The increase in taxes on capital gains, coupled with exemptions for retail investors, seeks to address income inequality concerns. This measure is expected to stabilize capital markets and reduce speculative activities in the short term.
• Securities Transaction Tax (STT): The enhancement of STT on futures and options transactions is aimed at regulating capital market activities and promoting long-term stability.

Economic Stability and Predictability

• Policy Framework: The proposal to establish a comprehensive economic policy framework aims to provide stability and predictability in tax and customs regimes. This framework is intended to guide policy decisions, foster investor confidence, and support sustainable economic growth.
• Dispute Resolution: Measures to reduce litigation and disputes in tax matters, including manpower augmentation for addressing backlogs, are aimed at improving ease of doing business and enhancing the tax administration''s efficiency.

Conclusion

The 2024 budget reflects a balanced approach towards fiscal consolidation, medium-term economic interventions, and comprehensive tax reforms. It addresses key economic challenges while laying the groundwork for sustainable growth and development. The emphasis on infrastructure, employment generation, and simplification of tax laws underscores the government''s commitment to economic stability and predictability. Overall, the budget aims to foster an enabling environment for investment, innovation, and inclusive growth in the country.