Union Budget 2024-25

On July 23, Finance Minister Nirmala Sitharaman presented the Union Budget 2024–25 to the legislature. The budget was centered on funding for the agriculture industry, launching employment-related programs, announcing financial support announcements for the MSME sector, investing in infrastructure, and projecting a 4.9% fiscal deficit with a pledge to cut it to a 4.5% deficit.

The government changed the capital gains taxes for the fiscal year and reduced customs duties concurrently. Under the new tax laws, the “taxation budget” takes the shape of a change to tax slabs. Read the full article for a complete analysis of Budget 2024.

Announcements, Overview, and Brief Description of Union Budget 2024-25

During the Budget Presentation, Ms. Sitharaman announced that the new income tax regime in FY25 will increase the standard deduction for salaried employees from ₹50,000 to ₹75,000. Nine priorities—productivity and resilience in agriculture, employment and skill-building, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms—were identified in the Union Budget 2024–2025 as means of creating plenty of opportunities.

1. Productivity and Resilience in Agriculture

A comprehensive review of the agriculture research setup will be undertaken to bring the focus on raising productivity and developing climate-resilient varieties. Funding will be provided in challenge mode, including to the private sector. Domain experts both from the government and outside will oversee the conduct of such research.

• New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for.
• In the next two years, 1 Cr farmers will be initiated into natural farming supported by certification and branding
• 10,000 need-based bio-input resource centers will be established.
• A strategy is being developed to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.
• Farmer-Producer Organizations, cooperatives, and start-ups for vegetable supply chains including for collection, storage, and marketing will be promoted.

2. Employment & Skilling

As a part of the Prime Minister’s package, three schemes to be implemented for ‘Employment Linked Incentive’:

Scheme A: First Timers

To provide a one-month wage (up to INR 15,000) to all persons newly entering the workforce in all formal sectors. The eligibility limit will be a salary of  INR 1 Lakh per month.

Scheme B: Job Creation in Manufacturing

Incentivize additional employment in the manufacturing sector that is linked to the employment of first-time employees.

Scheme C: Support to employers

To cover additional employment in all sectors. The government will reimburse employers up to INR 3,000 per month for 2 years towards their EPFO contribution for each additional employee.

Participation of women in the workforce, skilling programs, skilling loans and educational loans are also included in this scheme

3. Inclusive Human Resource Development and Social Justice

To achieve social justice comprehensively, the saturation approach of covering all eligible people through various programs, including those for education and health, will be adopted.

Schemes supporting economic activities by craftsmen, artisans, self-help groups, scheduled caste, scheduled tribe and women entrepreneurs, and street vendors will be strengthened.  Plan will cover the development of human resources, infrastructure, and the generation of economic opportunities.

For promoting women-led development, the budget carries an allocation of more than INR 3 Lakh Cr for schemes benefitting women and girls.

4. Manufacturing & Services: Support for the promotion of MSMEs

Special attention to MSMEs and manufacturing, particularly labor-intensive manufacturing. The government has formulated a package covering financing, regulatory changes, and technology support for MSMEs.

• For facilitating term loans to MSMEs for the purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced.
• A separately constituted self-financing guarantee fund will provide, to each applicant, a guarantee covering up to INR 100 Cr, while the loan amount may be larger.
• The limit of Mudra loans will be enhanced to INR 20 Lakh for those entrepreneurs who have availed and successfully repaid previous loans under the Tarun category.

6. Urban Development: Cities as Growth Hubs

• Working with states, the government will facilitate the development of Cities as Growth Hubs. This will be achieved through economic and transit planning and orderly development of peri-urban areas utilizing town planning schemes.
• Transit-oriented development plans for 14 large cities with populations above 30 lakh will be formulated.
• Under the PM Awas Yojana Urban 2.0, the housing needs of 1 Cr urban poor and middle-class families will be addressed with an investment of INR 10 Lakh Cr. This will include the central assistance of INR 2.2 Lakh Cr in the next 5 years.

6. Energy Security

• PM Surya Ghar Muft Bijli Yojana has generated a remarkable response with more than 1.28 Cr registrations and 14 Lakh applications.
• A policy for promoting pumped storage projects will be drafted for electricity storage.
• Nuclear energy is expected to form a significant part of the energy mix for Viksit Bharat.
• The development of indigenous technology for Advanced Ultra Super Critical (AUSC) thermal power plants with much higher efficiency has been completed. A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant using AUSC technology.

7. Infrastructure: Investment by Central Government

• Over the next five years, infrastructure will continue to receive strong budgetary assistance. INR 11,11,111 Cr has been set aside for capital expenses this year. This amounts to 3.4% of GDP.
• To assist the states in allocating their resources, a 1.5 Lakh Cr. Provision has been provided for long-term, interest-free loans.
• Private sector infrastructure investment will be encouraged by viability gap funding as well as supportive laws and regulations.
• To give 25,000 rural habitations access to all-weather connectivity, PMGSY’s Phase IV will be implemented.

8. Innovation, Research & Development

• Anusandhan National Research Fund for operationalizing basic research and developing prototypes. Additionally, a mechanism with a funding pool of INR one lakh crore will be formed to promote research and innovation led by the private sector at a commercial scale.
• The establishment of a venture capital fund with a 1,000 Cr INR goal is in line with the government’s ongoing focus on tripling the size of the space economy within the next ten years.

9. Next Generation Reforms

• An Economic Policy Framework to be formulated to promote the overarching approach to economic development. It will set the scope of the next generation of reforms for facilitating employment opportunities and sustaining high growth.
• The Indian government plans to simplify rules and regulations for Foreign Direct Investment and the use of the Indian Rupee as a currency.
• The adoption of technology towards the digitalization of the economy is to be enhanced.
• A taxonomy for climate finance for enhancing the availability of capital for climate adaptation to be developed. This will support the achievement of the country’s climate commitments and green transition.
• To enhance ‘Ease of Doing Business’, the government is already working on the Jan Vishwas Bill 2.0.

Conclusion

Overall the budget shows a positive step in pushing India towards a future where education, employment, and inclusive growth are at the forefront of national development. It sets the stage for elevated education standards to equip our youth with essential skills needed to create a more skilled workforce, and drive economic productivity and global success.

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For detailed information on Budget 2024-25, you can visit:

https://www.investindia.gov.in/team-india-blogs/indias-union-budget-2024-25-key-highlights

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