tl;dr
We see an increased overall funds allocation for MeitY, MHA, MIB and DoT in the 2024-25 Union Interim Budget as compared to 2023-2024, which is a good starting point for building and implementing robust digital systems. Budget allocated to MeitY has witnessed the highest increase among these ministries – 48.28% over last year's – however, no funds have been set aside for the rural digital literacy scheme PMG-DISHA (for the second year in a row), PLI schemes for large scale IT, or for promotion of digital payments. DoT has drastically cut short allocations to the USOF and directed them to central sector schemes, and on a positive note, increased funds to BharatNet. Budget for MHA has plateaued, but for MIB it has disappointingly dipped marginally. End of the day, the trend of decreasing fund allocation in revised estimates and underutilisation of funds in 2023-2024 remains a cause of worry.
Introduction
The Interim Budget for the Financial Year (“FY”) 2024-2025 was presented yesterday, February 1, 2024, by Union Minister Nirmala Sitharaman in the Lok Sabha during the parliamentary budget session which commenced on January 31, 2024 and is slated to conclude on February 9, 2024. The budget is an interim allocation of funds until India forms a new union government in the 2024 Lok Sabha elections, post which a full budget will be placed in both houses for deliberation again in July 2024. Further, there are plans to introduce 2 new bills in this session, namely the Public Examination (Prevention of Unfair Means) Bill, 2024 and the The Water (Prevention and Control of Pollution) Amendment Bill, 2024. A total of 26 bills are pending before the parliament.
Budget 2024-25 at a glance
Union Interim Budget for FY 2024-25 has cumulatively allotted ₹1,43,337.88 Cr to the Ministry of Electronics and Information Technology (MeitY), the Ministry of Information and Broadcasting (MIB), the Department of Telecommunications (DoT), and Ministry of Home Affairs (MHA). A glance at Ministry-wise Budget Estimates (“BE”) and Revised Estimates (“RE”) shows us the following:
- For the MeitY, allocation in BE 2024-2025 (₹21,385.15 Cr) saw an increase of 48.28% as compared to the RE of 2023-24 (₹14,421.25 Cr).
- For the MHA, allocation in BE 2024-2025 (₹5733.51 crores) saw an increase of 11.97% as compared to the RE of 2023-24 (₹5120.78 Cr).
- For the MIB, allocation in BE 2024-2025 (₹4342.55 Cr) saw a decrease of 2.41% as compared to the RE of 2023-24 (₹4449.76 Cr).
- For the DoT, allocation in BE 2024-2025 (₹1,11,876.67 Cr) saw an increase of 13.74% as compared to the RE of 2023-24 (₹98,359.41 Cr).
We note a considerable 17.15% increase in total planned capital expenditure of DoT, MeitY, MHA, and MIB (₹1,43,337.88 Cr) over the RE of 2023-24 (₹1,22,351.2 Cr), stemming largely from a 48.28% increase for the Ministry of Electronics and Information Technology (MeitY). This increment can be attributed to MeitY’s capital allocation towards the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India, which saw a whopping 359.1% increase as compared to 2023-24.
Ministry of Electronics and Information Technology (MeitY)
MeitY Table 01: Budgetary allocations for specific items
The total budgetary allocation for MeitY in the Budget for 2024-2025 is ₹21385.2 Cr, which is a 29.2% increase from the previous financial year’s budget. The increase is even higher when compared to the RE of 2023-2024, i.e., a year-on-year change of 48.28%. This is in contrast to the budgetary trends we witnessed in 2021, 2022 and 2023, where there was underutilisation of the budget.
A glaring change which was put in effect from 2023 was the discontinuation of the PMG-DISHA scheme, which was key to increased connectivity, telecom penetration, and digital literacy across India. Further, this year the budget for autonomous bodies and miscellaneous central expenses has been curbed by a 17.26% margin – hopefully, this does not compromise vital pillars of governance or cut funds from independent institutions necessary to keep checks and balances on the executive. Despite this, we appreciate the large overall increase in budgetary allocation to MeitY in FY 2024-2025 and hope to see these funds be directed towards infrastructure development aimed at increasing telecom and broadband connectivity, research and deep deliberation into emerging technologies, strengthening of citizen-centric fora and systems, and closing the digital divide.
Allocation towards the Digital India Program further reduced to ₹4215.01 Cr in the 2024-2025 BE, continuing the downward trend we saw last year and witnessing a massive decrease of 12.1% and 4.8% in comparison to the allocation made in 2023-2024 BE and RE respectively. The decrease can mainly be attributed to reduction or removal of allocation towards digital payments, PLI for Large Scale Electronics and IT Hardware, and the PMG-DISHA scheme.
Two interesting trends emerge from the new allocation. First, the discontinuation of the rural digital literacy scheme, PMG-DISHA, seems permanent – carrying on its trend from last year of not allocating any funds. Allocations to the scheme touched an all time low in 2022 since 2017, and then last year in the FY 2023-24 budget, no funds were allocated towards it. The last impact assessment study of PMG-DISHA was carried out by Indian Institute of Public Administration in 2020-21. The report concluded that the scheme, as a digital literacy programme, “plays an indispensable part in not only bridging the digital gap in the country but also transforming it into a knowledge economy and society.” The allocations made to this scheme must increase in order to ensure its effective progress and robust digital literacy in the country.
Second is the total exclusion of ‘Promotion of Digital Payments’ from MeitY’s budget. Last year, we noted that the allocation to this domain plummeted to ₹ 1500 crores as compared to ₹2137 Cr allocated to it in the 2022-2023 RE, reflecting a decline of 29.8%. Now, it is down to 0. It is also interesting to note that revised allocations increased sharply in 2022-2023 (₹2137 Cr), witnessing a jump of 968.5% as compared to the 2022-2023 BE which stood at ₹200 crores. Even though the allocation in 2023-2024 is higher than the 2022 BE, it stood lower than the RE.
Interestingly, the Union Finance Minister in her Budget speech last year had noted that “Fiscal support for this digital public infrastructure (digital payments) will continue in 2023-24”, and the Implementation of Budget Announcements 2023-2024 report released alongside the 2024-25 Budget states that “The proposal for continuation of the incentive scheme for promotion of digital payments for one year FY 2023-24, has been recommended by the Expenditure Finance Committee.” Despite this, a sharp turn has been taken to not allocate any more funds to it. Presumably, this was done because digital payments have already been well adopted by society and assimilated into our daily lives adequately, and no further promotion or incentivisation for them seems necessary. But it remains to be seen what next steps MeitY takes in the booming digital payments industry.
The allocation to National Informatics Centre in 2024-2025 BE has increased to ₹1748.64 Cr, as compared to ₹1552 Cr allocated in the 2023-2024 RE, and ₹1527.26 Cr allocated in the 2023-2024 BE. Allocations towards CERT-In are on a steady increase for the past few years, which is a positive sign and alludes to strengthened public systems of cybersecurity audits. The allocations have marginally increased in 2024-2025 to ₹240 Cr from an estimated ₹225 Cr and revised ₹208 Cr in 2023-2024.
Allocation to the Unique Identification Authority of India has plummeted further by 25% in 2024-2025 BE as compared to the 2023-2024 RE. The allocation in this FY is 36.17% less than the last BE and far smaller than what was actually utilised in 2022-2023, i.e. ₹1219.7 Cr. In fact we see a steady decline in funds over the years.
Ministry of Home Affairs (MHA)
The total budgetary allocation for MHA is 2.84% lower than what was allocated in the BE for the FY 2023-24. The allocation in the budget estimates, net of receipts and recoveries, for MHA is ₹5733.51 Cr. Although there is a 11.97% increase over the 2023-24 RE that was pegged at ₹5120.78 Cr, the allocation is still 13.22% lower than what was made in 2023-24. The allocation for planned capital expenditure has marginally dipped as compared to both the 2023-2024 BE ( by 1.27%) and RE (by 6.21%), which is disappointing.
MHA Table 01: Budgetary allocations for specific items
Additionally, we notice an interesting trend in allocations to Census, Survey and Statistics/ Registrar General of India. For the past few years, the estimated budget for surveys and census has been large, but the actual utilisation remains miniscule. The biggest dip was seen in 2022-23, where the budget allocated was ₹3676 Cr, but only ₹513.18 Cr was utilised. For BE 2024-25, the allocation remains large, but it is likely to fall into the same pattern of remaining underutilised.
Ministry of Information & Broadcasting (MIB)
The total budgetary allocation for MIB in 2024-25 is ₹4342.55 Cr, which is a 7.45% decrease from the 2023-2024 Budget. This cut comes after MIB seemingly was able to utilise a higher budget allocation last year, which seems incongruent.
MIB Table 01: Budgetary allocations for specific items
The allocation for Central Sector Schemes/Projects under MIB has plateaued as compared to the BE 2023-2024.
Department of Telecommunications (DoT)
In 2024-25, the Department (which operates under the Ministry of Communications) has been allocated a whopping ₹111876.6 Cr, which is 14.65% increase over the budget allocated in 2023-24 (₹97579.05 Cr) and 13.74% over the RE for 2023-24 (₹98359.41 Cr). Notably, no funds have been allocated for the defence spectrum, for which DoT estimated a large amount of ₹2285.32 Cr last year, but utilised only 13.8% of it (₹315.55 Cr).
DOT Table 01: Budgetary allocations for specific items
Surprisingly, the Universal Services Obligation Fund (“USOF”) took a hit in funds with only ₹ 2000 Cr allocated to it in the 2024-25 Budget, a 80.77% fall from last year’s ₹10400 Cr. Last year’s RE also plummeted to ₹2000 Cr, a concerning trend signalling to the underutilisation of USOF funds. Telecom services providers have persistently urged the Ministry of Finance to suspend USOF till the existing corpus is exhausted, and in their Budget requests for 2024-25, pressed for an exemption from the service tax on “assignment of right to use natural resources” and the slashing of customs duty on telecom equipment to zero.
DoT has an opportunity to direct underutilised funds in USOF to other schemes, such as towards deeper telecom penetration or to social security interventions (like providing people uninterrupted access to internet and mobile services even if they fall behind on their payments or recharge schedules). We see that other central sector expenditures have swelled by 46.49% from BE 2023-24 and almost doubled from the actual expenditure in 2022-23, which may be where the USOF budget has been diverted. We also note that there has been a 175.5% increase in BE 2024-25 (₹ 14843.3Cr) from RE 2023-24 (₹ 5386.7 Cr) and 27.1% increase from BE 2023-24 (₹ 11678Cr) under Central Sector Schemes/Projects.
The total Budgetary allocation for DoT projects for the year 2024-2025 is ₹2314.43 Cr, which is a 1.27% increase from the BE 2023-2024 and 149.62% from the RE 2023-2024. One of the key reasons for the increase in grant to the Department are the allocations made for the Domestic Industry Incentivisation Scheme (₹ 1910.8 crores), wireless planning and coordination (₹300 Cr) and digital intelligence unit project (₹ 85 Cr).
As far as allocations for BharatNet are concerned, there has been a significant increase of 70% in BE 2024-25 (₹8500 Cr) from BE 2023-24 (₹5000 Cr). The grant goes towards the creation of telecom infrastructure required for providing broadband connectivity to all the Gram Panchayats in the country and facilitating non-discriminatory access to service providers, for provisioning of broadband services in rural areas. The sharp increase in budget is appreciated.
An allocation of ₹2.92 Cr for 5G Connectivity test bed saw a decrease of 103.77% from RE 2023-24 (₹5.95 Cr). As we explore more deeply in Part I of this series, DoT had envisioned establishing one hundred labs for developing applications using 5G services in BE 2023-24. At this stage, only tenders have been floated for delivery of technical equipment, and vendors selected for a few of them, who will start delivery from February 2024. It seems that for 5G services to be rolled out in the country, we will need some more time and investment – we are still at the stage of conducting awareness workshops for upskilling and mentoring students and startups about the potential of 5G. It remains to be seen if additional budget is allocated as the year progresses and we move towards building infrastructures to support 5G.
Conclusion
The 2024-25 Budget does not fall far from last year’s, and is also an interim projection. While there are some notable highs, like shifting focus from USOF to other central schemes of DoT or ceasing funds for the promotion of digital payments specifically, there are some lows, too. PMG-DISHA, a key scheme for improving digital literacy, may be permanently suspended. From the 2023-24 implementation report, it also looks like many of the Union Government’s plans in the realm of technological developments and digital interventions, have not been implemented properly or in a timely manner.
An additional cause for concern is the decrease in the AE as compared to the RE, and in the RE as compared to the BE, for the last few years. The RE indicates how much is possible for the government to extend to the concerned sector and the AE indicates how much was actually extended. While some variation among the three is inevitable, too much of a difference can reduce credibility of the numbers and cause uncertainty. Cuts in the RE and actuals may also negatively affect the implementation of government schemes and projects. In light of the increasing digitisation across sectors and the increasing demand for improved digital literacy as well as access to digital services, we hope that the fund allocation in these concerned sectors continue to witness a positive trend. We can thus only hope that in the coming years we witness a positive trend in budget allocation and utilisation.
Read our analysis of the 2023-24 Union Budget implementation report in Part I here.
This post has been co-authored by Vinamra Harkar, Policy Intern, Internet Freedom Foundation.