2024 Interim Budget: Expectations and Predictions
As India approaches a critical juncture in its legal and economic journey, the upcoming interim budget for 2024, scheduled for February 1, garners significant attention and speculation, particularly from the legal and financial sectors.
Commercial and corporate litigation expert Sagar Aggarwal, Managing Partner at Areness, reflects on the nation's position at this pivotal moment. "As the calendar year closes, India finds itself standing at a fascinating juncture. 2023 was a landmark year for the Indian Legal System, with the Supreme Court delivering major landmark judgments like the DPDP Act, Criminal Law amendments, and the constitutional validity of Article 370, among others," he shares. "Simultaneously, the Indian economy has defied global odds by showcasing robust growth in FY24. However, amidst this narrative of legal dynamism and economic resilience, a cloud of uncertainty hangs — the upcoming interim budget."
India, which has seen 91 budgets since its independence, including 14 interim ones, is now poised to witness its 15th interim budget. The financial and political landscape is abuzz with speculation as Finance Minister Nirmala Sitharaman hints at a departure from the 'big policy announcement' trend in interim budgets, favoring a vote-on-account model instead.
The impending Lok Sabha elections in April-June 2024 cast a unique legal shadow over the interim budget, especially under the Model Code of Conduct (MCC), which restricts government actions that could influence voters, thereby limiting the scope for significant policy changes.
"Concerning fiscal prudence under the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act), the interim budget likely won’t introduce prominent tax cuts or raised expenditures," Sagar noted. "A clear communication of budget projections and expenditures for the initial months of the financial year is essential to avoid legal challenges and adhere to constitutional and electoral norms."
Concerning fiscal prudence under the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act), the interim budget likely won’t introduce prominent tax cuts or raised expenditures. A clear communication of budget projections and expenditures for the initial months of the financial year is essential to avoid legal challenges and adhere to constitutional and electoral norms.—Sagar Aggarwal
Sagar Aggarwal underscores the need for a budget that balances economic responsibility and political prudence, one that navigates electoral constraints while laying the groundwork for future growth.
Tax law expert Shankey Agrawal, Partner at BMR Legal, adds his perspective on expectations from the budget. "Interim budgets before General Elections are usually expected to bring sops, including personal tax relief for the common man. However, the Government should resist this temptation and continue its path of fiscal consolidation, along with increased capex in infrastructure, healthcare, and education," he suggests. "Additionally, fresh allocation for the successful PLI Scheme would be crucial to boost manufacturing and exports."
The Government should resist this temptation and continue its path of fiscal consolidation, along with increased capex in infrastructure, healthcare, and education. Additionally, fresh allocation for the successful PLI Scheme would be crucial to boost manufacturing and exports.— Shankey Agrawal
As India stands on the brink of a pivotal election year, the 2024 interim budget is not just a financial statement but a testament to the country's ability to navigate complex legal and economic waters in times of change and uncertainty.
Also of interest: Check out 2024 Budget Expectations and Insights from BMR Legal
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