Key projections, sector-wise expectations from FM and more

"While fertility challenges are becoming increasingly common, their treatment cost acts as a formidable barrier due to which many people have to give up their hopes of being parents. The increased demand for such treatment underscores the requirement of government-sponsored insurance policies specially designed for infertility and IVF treatments," said Kshitiz Murdia, CEO and co-founder of Indira IVF.

“Further reduction in corporate tax rates, now that direct and indirect tax collections are showing a robust trend. This would be keeping in line with the glide path the government has spoken about in the past. A tax reduction at this point would encourage business sentiment as a whole and would be an investment towards stronger tax collections in the future," said Harsh Gahlaut, Co-founder & CEO, FinEdge.

"Reducing double tax whammy on dividends paid to shareholders. This double taxation is a dampener for business investments (ROI) as first, the business pays tax on profits and then pays dividend distribution tax once again when the dividend is paid out. Investors who have put up risk capital while investing in business should also be able to withdraw profits as ease of doing business without having to pay taxes twice," he added.

India’s energy sector is hopeful that in the upcoming budget, cleaner fuels such as green hydrogen and natural gas would be at the forefront. Oil and gas sector expects some reforms for city gas distribution (CGD) players to boost consumption of natural gas in the country while the power sector expects announcements to encourage adoption of renewable energy. Read more

"MFIN has been advocating for a dedicated funding support for microfinance institutions with special focus on small and medium sized institutions," said Alok Misra, the company's chief executive officer and director. "Secondly, though the loans are unsecured, there is no suitable guaranteed mechanism available for the sector. A sector suited guarantee scheme will go a long way in boosting the credit rating of microfinance institutions as well as their ability to expand to difficult areas," he added.

India's trade deficit may be volatile in the coming months given the supply-side disruptions in the Red Sea, said Nomura. Shipping routes through Suez Canal have been blocked by Houthi rebels who claim to be avenging Israel's attack on Gaza. In their latest report following the trade-deficit data, the brokerage's economists said that the effects of these disruptions are likely to be visible from January onwards. Read more

- The power and renewable energy sector contends that the government should now prioritise green hydrogen, as it has previously championed solar and wind energy, resulting in substantial growth in their installation and manufacturing capabilities.
- In the upcoming budget, the industry anticipates policy incentives from the government to support energy storage solutions, ensuring continuous grid stability.

- The oil and gas industry anticipates the Finance Minister to reallocate a portion of its expenditures to enhance the green and sustainable energy sector.
- Many oil public sector undertakings (PSUs) are actively working towards attaining their net-zero goals and making substantial investments in renewable energy sources.
- In the prior budget, Sitharaman had earmarked Rs 30,000 crore for capital investments in the transition to energy for state-owned oil marketing companies (OMCs).
- Nevertheless, this allocation has not yet been disbursed to the OMCs.

- The energy sector anticipates that the emphasis of the interim Union Budget, scheduled for presentation on February 1, will be on energy transition and the allocation of funds for cleaner fuels.
- In the forthcoming budget, there is optimism within India's energy sector for a prominent focus on cleaner fuels, including green hydrogen and natural gas.
- The oil and gas sector is looking forward to potential reforms benefiting city gas distribution (CGD) players, to boost the consumption of natural gas in the country.
- Simultaneously, the power sector is hopeful for announcements that will promote the widespread adoption of renewable energy.

- Meanwhile, a senior official from the finance ministry stated on January 9 that there is unlikely to be any increase in tax rebate in the upcoming interim Union Budget under the new direct tax regime, which is scheduled to be announced on February 1.
- There were widespread speculations suggesting a possible increase in the personal income tax rebate from the current Rs 7 lakh to Rs 7.5 lakh in the vote-on-account.
- Nevertheless, it is anticipated that the government will announce an exemption from tax collected at source (TCS) on individual overseas credit and debit card spending, up to Rs 7 lakh per financial year, in the interim budget. Know more.

- In fiscals 2020-21 and 2021-22, amidst the challenges of the pandemic, the contribution of agriculture and its related sectors to the Gross Value Added (GVA) of the economy stood at 20.3 percent and 19 percent, respectively.
- However, with the recovery of other economic sectors, the agricultural share decreased to 18.3 percent in 2022-23.
- This development is not unfavorable, as more dynamic sectors have experienced a resurgence, leading to higher income levels for their workforce.
- It is worth noting that many agricultural land holdings are small, and those reliant on agriculture often earn only a subsistence income.
- Consequently, numerous small-scale landholders rely on wages from other sectors to meet their basic needs.

- The 2019 interim budget established a significant milestone by introducing a crucial and entirely novel initiative for direct income support, known as PM Kisan Samman Nidhi.
- Notably, this program was not only announced but also implemented from December 2018. Before the 2019 elections, a substantial number of landholders received the initial installment of PM-Kisan.

- The budget is a product of extensive discussions and collaborations involving various ministries and departments within the Finance Ministry.
- Notable figures within the Ministry contributing to the budget include Sanjay Malhotra, the Revenue Secretary; Ajay Seth, Secretary of the Department of Economic Affairs; Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management; Vivek Joshi, Secretary of the Department of Financial Services; TV Somanathan, Finance Secretary; and V Anantha Nageswaran, the Chief Economic Advisor.
- While input has been gathered from all stakeholders, the individuals primarily responsible for shaping the budget document are Somanathan; PK Mishra, Principal Secretary to the PM; and four additional secretaries to the PM -- Arvind Shrivastava, Punya Salila Srivastava, Hari Ranjan Rao, and Atish Chandra. Learn more.

- Leading the charge in formulating the Union Budget are the senior officials within the Prime Minister's Office (PMO) and the Finance Ministry.
- This intricate process unfolds with the initiation of a rigorous and complex series of tasks.
- The Finance Ministry, located in North Block on Raisina Hill in New Delhi, enters a lockdown mode, marked by the ceremonial 'halwa' event.
- Rooted in tradition, this ceremony signals the commencement of compiling and printing the Union Budget, symbolising the concluding phases of its preparation.

- The Finance Minister presents the Union Budget in the Lok Sabha on February 1, once it receives approval from the President for presentation.
- During the presentation, the Finance Minister outlines the essential aspects of the document and elucidates the rationale behind the proposed measures.
- Post-presentation, the Union Budget undergoes scrutiny and discussion in both houses of Parliament.
- Upon receiving approval from both houses, the Budget is subsequently submitted to the President for the ultimate endorsement.

- In adherence to tradition, the Finance Ministry annually organises a 'Halwa Ceremony' a few days prior to the presentation of the Union Budget, symbolising the official commencement of related events.
- A large quantity of the popular Indian sweet dessert is prepared in a massive kadhai and distributed among the Finance Ministry staff.
- The Finance Minister signals the beginning by stirring the kadhai and serving the sweet to officials.
- The ceremony gains significance as it marks the commencement of a 'lock-in' period for ministry staff, aiming to prevent any leaks until the financial statement is officially presented.

- After the budget allocation, the Finance Ministry conducts pre-budget consultations with diverse stakeholders to understand their demands and recommendations more comprehensively.
- These stakeholders encompass state representatives, bankers, agriculturists, economists, and trade unions.

- Following a thorough review of all suggestions, the Finance Ministry distributes revenue to different ministries and departments for their upcoming expenditures.
- If there are any disputes regarding fund allocation, the finance ministry engages in discussions with the Union Cabinet or the prime minister before making a decision.

- Revenue and expenditure projections are analysed by the finance ministry upon reviewing the information provided by the Department of Expenditures.
- A comparison is made between the estimated revenue and expenditure to ascertain the total budget deficit.
- Subsequently, the government engages with the Chief Economic Advisor to establish the necessary borrowings to address the budget deficit.

- The revenue secretary receives proposals from all ministries and Union Territories, which are then carefully examined by high-ranking government officials.
- The Department of Expenditures and Niti Aayog engage in comprehensive consultations to assess these proposals. Once the information is verified and approved, it is forwarded to the finance ministry.

- To initiate the budget formulation process, the finance ministry of the union issues circulars to ministries, states, union territories, and autonomous entities, instructing them to develop projections for the forthcoming financial year.
- These circulars provide basic templates and essential guidelines to assist the ministries in formulating their requests.
- It is mandatory for all ministries, union territories, and autonomous entities to divulge their revenues and expenditures from the preceding year, alongside providing their anticipated estimates.

- As commonly understood, the fiscal year spans from April 1 to March 31, necessitating parliamentary endorsement of the budget prior to April 1.
- Given the intricate nature of budget formulation, it involves extensive planning, consultations, and compilation, ultimately resulting in the completion of the final budget draft.
- Consequently, this multifaceted process kicks off nearly six months ahead of the financial statement's presentation in Parliament, with deliberations commencing in August-September of the preceding year.