The upcoming Budget 2024-25, to be presented by Finance Minister Nirmala Sitharaman, carries significant weight as Indian households grapple with declining earnings and savings. Rising costs in essential sectors such as food, education, rent, and utilities have forced many families to deplete their savings or resort to loans. This report delves into the current economic landscape for Indian households, their expectations from the forthcoming budget, and potential measures that could alleviate their financial burdens.
Current Economic Scenario
The economic downturn has had a profound impact on Indian households. A recent survey highlighted that 48% of households are experiencing a reduction in annual earnings and savings for the fiscal year 2024-25. This decline is evident in the net household savings, which have dropped from INR 23.29 trillion in FY21 to INR 14.16 trillion in FY23. The shrinking savings pool has put immense pressure on families to manage their daily expenses and future financial needs.
Rising Costs and Financial Squeeze
The cost of living has been steadily increasing, with notable spikes in prices for essential commodities and services. Food inflation has been a significant concern, with the prices of staples like vegetables, pulses, and edible oils witnessing substantial hikes. Similarly, education costs have soared, burdening families with high fees for schools and colleges. The rise in rent and utility bills has further strained household budgets, leaving little room for discretionary spending.
In response to these financial challenges, many households have had to make difficult choices, such as cutting down on non-essential expenses, dipping into savings, or taking on additional debt. The financial squeeze has also led to a reduction in investments and savings for future goals, such as children’s education, retirement, and emergency funds.
Expectations from Budget 2024-25
Given the current economic challenges, Indian households have high expectations from Budget 2024-25. Key areas where families are seeking relief include tax reforms, increased deduction limits, and measures to curb inflation. Here are some specific expectations:
- Income Tax Relief: Many households are hoping for a revision in income tax slabs to increase the threshold for taxable income. This move would provide immediate relief to taxpayers by reducing their tax liabilities. Additionally, increasing the standard deduction and introducing new exemptions for essential expenses could further ease the financial burden.
- Higher Deduction Limits: Increasing the deduction limits under Section 80C, which currently stands at INR 1.5 lakh, would encourage savings and investment. Households are also looking for enhanced deductions for health insurance premiums under Section 80D, given the rising medical costs.
- Measures to Control Inflation: Steps to control food and fuel inflation are crucial for stabilizing household budgets. The government could consider reducing import duties on essential commodities, providing subsidies, or implementing policies to improve agricultural productivity and supply chain efficiency.
- Support for Education and Housing: Introducing tax benefits for education expenses and housing loans would help families manage these significant financial commitments. Expanding scholarship programs and providing low-interest loans for education could also alleviate the burden on parents.
- Enhanced Social Security: Strengthening social security programs, such as pension schemes and health insurance for the unorganized sector, would provide a safety net for vulnerable households. Expanding the coverage and benefits of existing schemes could offer much-needed support to those facing financial hardship.
Potential Impact of Budget 2024-25
If the government addresses these expectations in Budget 2024-25, it could have several positive outcomes for Indian households:
- Increased Disposable Income: Tax relief measures would leave more money in the hands of taxpayers, boosting their disposable income. This, in turn, could stimulate consumer spending, driving economic growth.
- Improved Savings and Investment: Higher deduction limits would encourage households to save and invest more, leading to greater financial stability and long-term wealth accumulation.
- Controlled Inflation: Effective measures to curb inflation would stabilize prices of essential commodities, making daily expenses more manageable for families. This would also improve the overall economic sentiment and consumer confidence.
- Access to Education and Housing: Enhanced support for education and housing would enable families to invest in their future, ensuring better opportunities for their children and improved living standards.
- Social Security and Welfare: Strengthening social security programs would provide a safety net for vulnerable households, reducing their financial stress and improving their quality of life.
Conclusion
The Budget 2024-25 is a critical opportunity for the government to address the financial challenges faced by Indian households. By implementing tax reforms, increasing deduction limits, controlling inflation, and providing support for education and housing, the government can alleviate the financial burdens on families and foster economic growth. Indian households are looking to Finance Minister Nirmala Sitharaman with hope and anticipation, expecting measures that will help them navigate these challenging times and build a secure financial future.
