Modi 3.0's First Union Budget Targets Economic Growth And Fiscal Health

The Modi 3.0 government is set to present its first Union Budget in July, focusing on growth, inflation control, and fiscal consolidation. The RBI's announcement of a record Rs 2.11 lakh crore dividend for FY24 will aid in accelerating fiscal consolidation, lowering the debt-to-GDP ratio, and reducing market borrowing. The government's goal is to transform India into a $5 trillion economy and the world's third-largest through policies addressing agriculture, job creation, public spending, and tax collections.

Expectations for Tax Relief and Health Spending

The salaried class anticipates tax relief in the form of personal tax rate cuts or an increase in the tax exemption limit. Deloitte analysts speculate that the income tax exemption threshold under the new regime may be raised to Rs 5 lakh from the current Rs 3 lakh. However, economists hold contrasting views on the possibility of a personal income tax cut in the forthcoming budget.

Health spending has stagnated over the past decade, with only 0.3% of GDP allocated towards healthcare by the central government. The National Health Mission's share has decreased from over 60% of total health expenditure before the pandemic to 54.6% in FY24.

Electric Vehicles and Housing Support

The government supports electric vehicles (EVs) through schemes and subsidies, targeting 30% of all vehicle sales in India by 2030. Deloitte suggests that extending and increasing the deduction for EV loans to Rs 2 lakh per year would significantly bolster EV adoption.

Salaried individuals hope for tax reductions amidst escalating living expenses, with calls for revised tax slabs, adjustments in Housing Rent Allowance (HRA) rates, and increased support for affordable housing in Budget 2024.

Tourism Sector Growth and Pre-Budget Consultations

The tourism sector may receive further support in the Union Budget 2024-2025 as it has grown healthily post-pandemic. MakeMyTrip CEO Rajesh Magow calls for a streamlined GST and registration process for online travel agents and a uniform GST rate for hotel tariffs.

Finance Minister Nirmala Sitharaman held a pre-Budget consultation meeting with finance ministers from states and union territories last week to gather insights and recommendations for the Union Budget. Sitharaman will present the Union Budget for the financial year 2024-25 in late July.