Budget 2024: Aviation sector gears up for expansion, DGCA funds reduced

The Directorate General of Civil Aviation (DGCA) is budgeted to receive Rs 302.64 crore, down from Rs 397.55 crore in the revised estimates for 2023-24

In her 2024 Interim Budget speech on February 1, Finance Minister Nirmala Sitharaman highlighted the progress in India’s aviation sector, including plans to expand the number of airports to 149, introduce 517 new air routes, and anticipate a rise in air travelers to 13 million. Sitharaman emphasised the record-breaking aircraft orders exceeding 1,000.

While tabling the interim Budget, the finance minister had said, “The number of airports has doubled to 149, adding that Indian carriers have pro-actively placed orders for over 1,000 new aircraft. Roll out of air connectivity to Tier-II and Tier-III cities under UDAN scheme has been widespread. As many as 517 new routes are carrying 13 million passengers.”

Budget cut 

In the interim Budget, the budgetary allocation for the Ministry of Civil Aviation has been decreased to Rs 2,300 crore for the upcoming financial year, as compared to Rs 2,922.12 crore in the revised estimate for the current financial year.

As outlined in documents from the interim Budget for 2024-25, this allocation comprises a revenue component amounting to Rs 2,257.79 crore.

The Budget document shows decreased allocations for regulatory bodies, including the Directorate General of Civil Aviation (DGCA) and the Bureau of Civil Aviation Security (BCAS) for the financial year 2024-25.

The DGCA is budgeted to receive Rs 302.64 crore, down from Rs 397.55 crore in the revised estimates for 2023-24, while BCAS will be allocated Rs 89 crore, reduced from Rs 100.02 crore in the same period.

UDAN budget allocation cut by 60 per cent

The budget allocation for the regional connectivity scheme UDAN (Ude Desh Ka Aam Nagrik) has been reduced by 60 per cent from its previous highest-ever allocation. This fund is aimed at revitalising airports that are currently unused or underused in Tier-II and Tier-III cities.

The government has allocated Rs 502 crore for the scheme, a decrease from the previous Budget Estimate of Rs 1,244 crore, which marked the highest allocation since the scheme began in 2017.

Reports suggest that due to the difficulties encountered by airlines, such as the grounding of aircraft by regulatory authorities and rising aviation fuel costs, there was an anticipation of financial aid or incentives.

It stated that the aviation sector had hoped for tax cuts or a temporary relief package to assist airlines in their recovery and ensure their ongoing viability, according to a report by The Economic Times.