Nirmala Sitharaman, the Indian Finance Minister wrapped up another Halwa ceremony on 24 January 2024.
#WATCH | Delhi | The Halwa ceremony, marking the final stage of the Budget preparation process for Interim Union Budget 2024, was held in North Block, today, in the presence of Union Finance & Corporate Affairs Minister Nirmala Sitharaman and Union Minister of State for Finance… pic.twitter.com/wjoyI5QqQ3
— ANI (@ANI) January 24, 2024
For those who don’t know the story behind this customary ceremony, every year this ceremony is performed just before the “lock-in” process of the Union Budget. The budget will then be presented in Lok Sabha on February 1st, 2024.
This year, however, there are some changes. Since this is the year of the general elections, this budget will be known as an “interim budget” or “Vote on account budget”.
What is an Interim Budget or Vote-on Account Budget?
Since this is the year of the general elections, the budget that is presented is only meant to last till July 2024. After the general elections, the new government will then table their union budget.
Even though interim and Vote-on account is used interchangeably. there are subtle differences between the two.
An interim Budget includes:
Plan and non-plan expenditures and receipts
Changes in tax rates
Revised estimates of the current financial year and estimates for the coming financial year
The Vote-on-account budget would highlight:
Essential expenditures (for the government for two months (sometimes stretching to four months)
These essentials include salaries of central government staff, ongoing projects and their funding and other planned important government expenses.
What can eCommerce business owners expect?
The Finance Minister has already declared that we should not expect any “Spectacular” announcements on February 1st.
“I am not going to play a spoilsport, but it is a matter of truth that the February 1, 2024, Budget that will be announced will just be a vote on account because we will be in an election mode. The Budget that the government presents will just be to meet the expenditure of the government till a new government comes into play,” Nirmala Sitharaman said to a question by the press
That hasn’t completely discouraged industry leaders across the country as they are hopeful for certain declarations that can make the government look good before the general elections of 2024.
To recap, here are the most impactful announcements made during the Amrit-Kaal Budget of 2023.
The most pressing expectations from the interim budget of 2024 are:
1. Funding eCommerce
Digital-first brands have been seeing tremendous growth over the last few years. To support this and be a catalyst for positive change, the government needs to support online businesses with strong financial and regulatory help.
More funding will speed up tech improvements and create new ways of doing things. This will put our country at the forefront of the global digital economy. Plus, online selling is crucial for small and medium businesses, helping them reach customers around the world.
D2C brand owners are expecting the government to announce certain measures that will help the eCommerce ecosystem in India.
The two main expectations are:
- Announcing the eCommerce policy that is in the final stages of its draft formulation (Read more about this policy here)
- Announcing funds that will help warehouse and last-mile delivery infrastructure pan-India
- Tax incentives for growing D2C brands to help India reach the trillion-dollar mark
2. Updates to tax regime
Talking about tax, it’s a general wish every year for changes to the tax regime. The last Union Budget announced a new tax regime which reduced the surcharge for the higher income bracket and also permitted a standard deduction.
Even though it’s pretty certain that the Finance Minister will not make any major announcements, there are talks of making the new tax regime more appealing to citizens.
Major expectations include:
- Increase in the basic exemption limit
- Reduced interest on home loans
- HRA exemption
- Health insurance premium deduction
3. Focus on the logistics sector
In the last couple of years, the government has announced major initiatives in the logistics sector. From the pan-India connectivity project to Gati Shakti, to the National Logistics Policy (NLP) of 2022, and then the increase in capital investment outlay by 33% to Rs 10 lakh crore in the union budget 2023-24 – The government has recognized the need to put an extra emphasis on this sector of the economy.
This year too, expectations include:
- More funding and schemes that will expand the NLP
- Schemes to strengthen last-mile delivery and warehousing in tier 2, tier 3 and tier 4 cities
- Identifying bottlenecks and optimizing logistics
“Prioritizing capital expenditure in key infrastructure projects, alongside financial incentives like PLI, tax benefits, and subsidies, can drive innovation in logistics. Building a ‘One India’ logistics ecosystem and integrating initiatives like the National Logistics Policy and Sagarmala Project are crucial to enhancing India’s global Logistics Performance Index ranking.” Rampraveen Swaminathan, MD & Chief Executive Officer, Mahindra Logistics Ltd
4. Boosting digital infrastructure
Initiatives like Open Network for Digital Commerce (ONDC) and Open Credit Enablement Network (OCEN) have been able to assimilate smaller eCommerce players.
These government-backed platforms hold a strong promise for streamlining digital commerce and making it more accessible and inclusive.
There are expectations from the government to announce measures that will incentivise more eCommerce players to join the network.
Industry leaders like Bhargav Errangi, the founder of POP, have also requested the government to introduce incentives that will expand the usage of UPI and Rupay cards in rural and under-banked areas of the country.
Instamojo users have found it easy and affordable to collect payments online with a simple payment link. With lesser transaction charges than all major financial platforms in the country, Instamojo is small business-friendly and is working towards pricing a level-playing field for small business, farmers, women entrepreneurs, tribal communities and more.
Want real-time updates on the Budget for 2024? Follow Instamojo on X (ex-twitter) and get a play-by-play for all important and relevant eCommerce announcements on February 1st.
