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Reforming, Performing and Transforming India

Bijal S Doshi, Partner, and Meet Jain, Associate Consultant, from Deals and Corporate Finance at CLA Global Indus Value Consulting examine the key takeaways from the 2024 Interim Budget, which analysts are applauding for standing out as a beacon of hope, economic, inclusive and sustainable transformation.

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On February 1, 2024, the Honorable Finance Minister Nirmala Sitharaman presented the India Interim Union Budget for 2024-2025 to Parliament. The focus was on economic progression and empowerment, providing a broad vision and framework for transforming India. Given the forthcoming elections, there were no major reforms or direct and indirect tax changes. These are likely to come in the regular Budget, which will be presented in July 2024.

With a strategic focus on financial discipline and economic enhancement, the Budget retained the status quo on taxes and outlined an 11% increase in capital expenditure of ~USD 133.73 billion in the FY 2024-25. This move is aimed at propelling India’s economic trajectory and fortifying its infrastructural backbone. Additionally, the Honorable Finance Minister emphasized the Government’s dedication to prudent economic management and its target to reduce the fiscal deficit to 5.1% of GDP in the coming year, with further ambitions to decrease the deficit again in the FY 2025-26.

Presenting a clear Viksit Bharat vision

The Government set out its vision for a prosperous India with growth in all industries and society segments. The overall vision is of a developed India – Viksit Bharat – by 2047 – to coincide with 100 years of independence. The focus is on sustainable prosperous growth, empowering vulnerable sections of society, covering all castes and addressing systemic inequalities. The next five years will be considered the most transformative, with developments in infrastructure, healthcare, technology, green energy and agriculture all highlighted in the plan.

Capital Expenditure and Fiscal Policy:

The numbers presented scored high on fiscal prudence without compromising on CapEx.

  • For FY 2024-25, the Budget forecast receipts and expenditures of ~USD 371.08 billion and ~USD 574.22 billion, respectively.
  • It was confirmed that the fifty-year interest-free loans to states would continue this year, amounting to a consolidated outlay of ~USD 15.66 billion.


Notable increases allocated to the manufacturing sector for FY 2025 (compared to FY 2024) include:

  • Production-Linked Incentive (PLI) scheme: ~USD 746.99 million (+33%)
  • Solar Grid development: ~USD 1024.10 million (+71%)
  • Green Hydrogen initiatives: ~USD 72.29 million (+102%),
  • Semiconductor manufacturing support: ~ 831.33 million (+130%), featuring a significant push in the technology and sustainable energy sectors.

Solar and Renewable Energy

In a decisive move to support environmental stewardship, significant resources were allocated to bolster the green energy sector. Including:

  • Free electricity through rooftop solarization, enabling a household to gain up to 300 units per month. This will benefit 10 million households.
  • To meet the ‘net-zero’ 2070 commitment, key measures include:
    • Viability gap funding for offshore wind energy with an initial capacity of one gigawatt.
    • Coal gasification and liquefaction capacity will be set at 100 million tons by 2030, reducing reliance on imports.
    • Mandatory blending of compressed biogas (CBG) in CNG for transport and PNG for domestic use.
    • Financial support for biomass aggregation machinery procurement, enhancing green energy use.

Infrastructure – Railway, Port, Aviation, and Logistics

The Budget recognizes that the recently announced India-Middle East-Europe Economic Corridor will be a game changer. In particular for improving logistics efficiency through the implementation of major railway corridor programs. This includes:

  • Upgrading of 40,000 rail bogies/carriages to enhance passenger safety and comfort.
  • The construction of three new railway corridors – energy, mineral and cement, port connectivity and high traffic density. The railway CapEx allocation of ~USD 30.36 billion is marked as the highest in history in India, demonstrating a strong commitment to upgrade and expand India’s railway infrastructure.
  • Continuing the development of new airports and expanding the number of routes.


To support research and simulate technology innovations in the private sector and among start-ups, the Budget allocated a substantial  amount –  ~USD 12.05 billion, offering long-term finance options. These can be extended up to 50 years with minimal or zero interest rates. Emphasized as being crucial for supporting economic growth, the Finance Minister also noted the importance of providing technology access to micro, small and medium enterprises (MSMEs).

Agriculture and Rural Development

Several measures were allocated to support the agriculture and allied sectors:

  • With India being the largest producer of milk globally, the Interim Budget provides for enhanced support to dairy farmers and investment in agricultural productivity through post-harvest activities.
  • Emphasis on the need to rejuvenate the agricultural and marine sectors, with a specific focus on aquaculture through innovative strategies.
  • Focus on modern storage, efficient supply chains, and marketing to boost sectoral growth by encouraging greater private and public investment.

Housing and Healthcare

To support the rapid urbanization in India as a result of demographic changes, a scheme was announced to support the middle class populations to buy or build their own houses. Regarded as being the cornerstone that will support economic development, other announcements included:

  • Building ~20 million homes in rural areas in the next five years.
  • Allocating ~USD 9.64 billion for housing, ensuring continued support for affordable housing.
  • Increased allocation to various healthcare schemes, focusing on enhancing the country’s healthcare infrastructure.

Youth Upskilling

The youth were identified as one of four priorities in the Budget. In order to equip India with a future workforce, the focus on continuous investment in inclusivity, young people skills and emerging technologies continues unabated.

The Budget reviewed the success of the Skill India Mission, noting that as many as 14 million young people have received training and a further 5.4 million have been upskilled or reskilled. Over 3,000 new industrial training institutes have also been established. 

The Budget also provided for a rise in funding for school and higher education. This includes greater provision to support women in education, supporting enrollment in STEM courses and expanding the educational institute program to create Centers of Excellence, e.g.  the Indian Institute of Technology.

Direct and Indirect Taxes:

There were no changes in this Budget to the current tax rates and income slabs. The corporate tax remains the same for existing domestic companies (30/25/22 % plus surcharge, if applicable) and for foreign companies having a permanent establishment in India. For specific new manufacturing companies, the rate remains at 15%.

Tax breaks for startups and Sovereign Wealth Funds were extended to March 31, 2025, to support innovation and attract FDI.

Outstanding direct tax cases for small amounts up-to the FY 2015 are to be withdrawn.

In summary

The India Interim Budget 2024, with its strategic focus on fiscal stability, infrastructure development, technological innovation, and social welfare, lays down a comprehensive roadmap for India’s journey towards becoming a developed nation. By prioritizing governance, development, and performance, it aims to fulfill the aspirations of every Indian citizen, ensuring a prosperous and inclusive future for all.