The Union Budget for the financial year 2024-25 is a critical document outlining the government’s fiscal policy and expenditure priorities for the upcoming year. This budget comes at a pivotal time for India, amidst global economic uncertainties, domestic challenges, and opportunities for growth. In this comprehensive article, we will delve into the key highlights, sectors impacted, and the broader implications of the Union Budget 2024-25.
Overview of the Union Budget 2024-25
01 February, 2024 Tuesday The Finance Minister -Nirmala Sitharaman presented the Union Budget for the year 2024-25. Budget focuses on promoting economic, infrastructure development and social welfare; keeps fiscal discipline It aims to navigate between the growth imperatives of a rapidly developing country and constraints induced by global economic slowdowns, as well as domestic fiscal prudence.
For 2024-25 fiscal, the overall spend is projected at Rs 45 lakh crore with an accent on capital spending to bolster infrastructure and support job creation. The revenue deficit will be 2.7 per cent of GDP and the fiscal deficit is projected at 5.9 per cent of GDP as against last year’s more than six per cent target(output). This will reduce the fiscal deficit and strengthen long-run economic stability.
Key Highlights and Announcements
Economic Growth and Infrastructure Development
Atlast we are spending a couple of lacs for development: A third, or one-third extra than last yr on capital expenditure (inr 10 lac crore) approx; Roads, railways, airports and urban infrastructure would fall under this. It is built around augmenting accessibility and promoting the effectiveness of transportation networks.
It also provides for the introduction of a “National Logistics Policy” to promote seamless and cost-effective logistics services by increasing transparency, reducing trade costs and improving India’s share in global markets. The policy will do this by ensuring seamless intermodal connectivity for the proposed unified logistics ecosystem.
Agricultural Sector and Rural Development
A large part of the Indian population is engaged in agriculture, and hence a substantial increase has been done for this sector. The government has set aside INR 2.5 lakh crore to fund different schemes, including the PM-KISAN scheme that gives direct cash transfer to farmers. It had also announced a duty reduction of about INR 1.2 lakh crore in the irrigation projects and rural infrastructure development.)
The budget also lays emphasis on furthering organic agriculture and eco-friendly agricultural practices. It provides incentives to fatcai login practicing organic farmers and aims at the development of Certified Organic Clusters. This is expected to increase the quality of agricultural produce and income for farmers.
Health and Education
Union Budget 2024-25 gives a lot of importance to two core sectors – healthcare and education. Among other measures, the budget has announced an outlay of Rs 3 lakh crore for health care which will encompass addressing critical gaps in quality and human resources – with a major focus on strengthening primary health infrastructure; extending coverage benefits from Ayushman Bharat: adding one more component (extending its reach to cover Primary Health Infrastructure) along with setting up disease-specific centers within this framework; enhancing Medical Research.
Towards education, the budget proposes an earmarking of INR 1.5 lakh crore (EUR ~19 bn). Focus areas include setting up new educational establishments, the development of current infrastructure and leading efforts in alternative education sectors such as digital. The Budget further focussed on training facilities that will result in skill formation thereby increasing employability.
Social Welfare and Employment
The budget aims to address social welfare and employment generation through various schemes and programs. An allocation of INR 1.8 lakh crore is made for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), which provides employment opportunities in rural areas. This is expected to create millions of jobs and support rural livelihoods.
The budget also announces the launch of the “National Skill Development Mission” to provide training and skill development to 50 million youth over the next five years. This initiative aims to bridge the skill gap and enhance the employability of the Indian workforce.
Tax Reforms and Revenue Generation
On the tax front, the Union Budget 2024-25 introduces several reforms aimed at simplifying the tax system and enhancing revenue collection. The budget proposes a reduction in the corporate tax rate for small and medium enterprises (SMEs) to 15%, aimed at boosting their growth and competitiveness.
For individual taxpayers, the budget introduces a new tax regime with lower tax rates and simplified tax slabs. The standard deduction is increased to INR 75,000, providing relief to salaried individuals. Additionally, the budget proposes measures to curb tax evasion and improve compliance through the use of technology and data analytics.
Energy and Environment
The budget places a strong emphasis on sustainable development and renewable energy. An allocation of INR 1.2 lakh crore is made for renewable energy projects, including solar, wind, and hydropower. The government also announces the launch of the “National Green Hydrogen Mission” to promote the production and use of green hydrogen as an alternative energy source.
To combat climate change and reduce carbon emissions, the budget proposes the introduction of a carbon tax on high-emission industries. The revenue generated from this tax will be used to fund environmental conservation projects and promote clean technologies.
Sectoral Impact and Analysis
Manufacturing and Industry
Infrastructure development and tax reforms are the highlights of this years budget, which should benefit manufacturing sector manifold. Enterprise dynamics in the sector are likely to be positively affected by lower tax rates on SMEs. Better logistics and supply chain efficiencies will also bolster Indian manufacturing in addition to defence.
The budget also specifies that the Production Linked Incentive (PLI) scheme will be expanded to other sectors such as electronics, pharmaceuticals and textiles. This program offers significant financial incentives to firms for production, supporting investments and employment.
Information Technology and Digital Economy
There is likely to be a significant growth visibility for the information technology (IT) segment on account of outlay involved in digital infrastructure, and skill development emphasized by budget. Rs 50,000 crore has been allotted to build digital infrastructure inlcuding broadband access in rural areas and rolling out of the fifth generation or 5G networks.
It also proposed to set up a National Digital University for providing educational services online and through open learning. The move is to democratize quality education and make it accessible to a wider population besides reducing the digital divide.
Financial Services
Key Highlights For Financial Services Sector is seen getting a boost from the budget’s steps to promote financial inclusion and digital payments. The Budget provides for scaling up of Pradhan Mantri Jan Dhan Yojana (PMJDY) to make every unbanked family in India a part of the banking system and promote digital transactions.
The budget has also introduced a “Digital Payments Promotion Scheme” aimed at encouraging digital transactions and slashing cash usage. The scheme covers the subsidy of digital payment infrastructure and rewards for both businesses as well consumers to encourage them go for the digital channels.
Real Estate and Housing
The budget is generous to the real estate sector with its focus on affordable housing and urban development. INR 1 lakh crore for the Pradhan Mantri Awas Yojana (PMAY) that provide “Housing For All” by end of 2024.
The budget has also suggested bringing in a “Real Estate Investment Trusts (REITs) Promotion Scheme” to lure investments into the realty. The scheme includes tax benefits for real estate investment trusts (REITs) and steps to deepen their regulation.
Broader Implications and Future Outlook
Economic Growth and Stability
The Union Budget 2024-25 aims to accelerate economic growth while maintaining fiscal stability. The focus on infrastructure development, tax reforms, and social welfare is expected to stimulate economic activity and create jobs. The reduction in the fiscal deficit is a positive step towards long-term economic stability.
Social Equity and Inclusion
The budget’s emphasis on social welfare and rural development is aimed at promoting inclusive growth and reducing inequalities. The allocation of substantial funds for healthcare, education, and rural infrastructure is expected to improve the quality of life for millions of Indians.
Environmental Sustainability
The budget’s focus on renewable energy and sustainable development reflects the government’s commitment to combating climate change and promoting environmental sustainability. The introduction of a carbon tax and the promotion of green hydrogen are significant steps towards reducing carbon emissions and promoting clean energy.
Technological Advancements
The budget’s emphasis on digital infrastructure and skill development is expected to enhance India’s technological capabilities and competitiveness in the global market. The establishment of a National Digital University and the expansion of digital connectivity are steps towards a digitally empowered society.
Challenges and Risks
Despite the positive outlook, the Union Budget 2024-25 also faces several challenges and risks. The global economic slowdown, geopolitical tensions, and domestic fiscal constraints pose risks to economic growth and stability. Additionally, the implementation of various schemes and projects requires efficient governance and coordination among different stakeholders.
Conclusion
The Union Budget 2024-25 is a comprehensive and forward-looking document that aims to drive economic growth, promote social welfare, and ensure environmental sustainability. The focus on infrastructure development, tax reforms, and digital transformation reflects the government’s commitment to creating a resilient and inclusive economy. If you like reading this article then please consider reading our article about Asia.
