1.Highlights of Union Budget 2024-25

Budget Estimates 2024-25 The Union Budget 2024-25 outlines the government’s fiscal framework, focusing on growth and fiscal discipline. The key budget estimates are:

• Total receipts (excluding borrowings): ₹32.07 lakh crore.
• Total expenditure: ₹48.21 lakh crore.
• Net tax receipts: ₹25.83 lakh crore.
• Fiscal deficit: Targeted at 4.9% of GDP, with a goal to bring it below 4.5% by next year.
• Inflation: Stable and gradually moving towards the target of 4%, with core inflation (excluding food and fuel) at 3.1%.

Employment and Skilling Focus A central theme of the budget is employment generation and skill development, aimed primarily at the youth and MSME sectors. The Prime Minister’s Employment and Skilling Package is a major initiative under which five schemes have been introduced to benefit around 4.1 crore youth over five years. Key schemes include:

1. Scheme A: Support for first-time employees by offering a one-month salary (up to ₹15,000) in three installments through EPFO registration.
2. Scheme B: Job creation incentives in the manufacturing sector, providing employer and employee benefits related to EPFO contributions in the first four years of employment.
3. Scheme C: Government reimbursement of up to ₹3,000 per month for two years towards EPFO contributions for each additional employee hired.
4. New Skilling Scheme: 20 lakh youth will be skilled over five years, with 1,000 ITIs being upgraded under the hub-and-spoke model.
5. Internship Scheme: Offers internships in top 500 companies to 1 crore youth over five years.

Indirect Taxes

• GST Simplification: With GST’s success, the government aims to simplify the tax structure further, expanding GST to more sectors.
• Sector-specific Customs Duty Changes:
  • Medicines: Exemption of customs duty on three cancer drugs (Trastuzumab Deruxtecan, Osimertinib, Durvalumab).
  • Mobile Phones: Reduction of Basic Customs Duty (BCD) on mobile phones and parts, such as PCBAs and chargers, to 15%.
  • Precious Metals: Duties on gold and silver reduced to 6%, platinum to 6.4%.
  • Marine Products: Reduced BCD on certain shrimp and fish feed ingredients to support the seafood sector.

Direct Taxes

• Simplification and Rationalization: Efforts are ongoing to simplify tax rules, improve taxpayer services, reduce litigation, and ensure tax certainty.
• Corporate and Personal Income Taxes: In FY24, 58% of corporate taxes were paid under the simplified tax regime, and over two-thirds of personal income tax filers opted for the simplified regime.
• TDS Simplification: TDS rates have been streamlined, with a reduced 2% TDS on many payments. E-commerce TDS has been reduced from 1% to 0.1%.

Personal Income Tax

• Standard deduction for salaried employees increased from ₹50,000 to ₹75,000.
• Family pension deduction enhanced from ₹15,000 to ₹25,000.
• Introduction of revised tax rate structures under the new tax regime.

Social Security and Startups

• Employers’ NPS contribution deductible increased from 10% to 14% of salary.
• Angel tax abolished to boost the startup ecosystem.
• Simplified tax regime introduced for foreign shipping companies and cruise tourism to boost domestic travel.

Capital Gains and Reassessment

• The time limit for reassessment extended from three to five years if the escaped income exceeds ₹50 lakh.
• Simplified tax rates for capital gains: short-term gains on certain assets taxed at 20%, while long-term gains on all assets taxed at 12.5%.

Litigation and Tax Appeals

• The Vivad Se Vishwas Scheme 2024 aims to resolve pending tax disputes.
• Monetary limits for appeals in tax tribunals and courts have been increased to reduce litigation.

In summary, the 2024-25 budget prioritizes employment, skilling, and support for MSMEs while aiming for fiscal consolidation. The tax regime is simplified, and measures to bolster sectors like manufacturing, agriculture, and startups are in place to drive economic growth.

 

 

2.Public Finance and Development

Union Budget 2024-25 Overview: The Union Budget 2024-25, presented as the first general budget of the 18th Lok Sabha, focuses on enhancing the socio-economic development of India. The key priority groups targeted by the budget are the poor, women, youth, and farmers. With an allocation of ₹1.48 lakh crore dedicated to education, employment, and skilling initiatives, the budget emphasizes creating opportunities for growth and support, particularly for the middle class and MSMEs.

9 Key Priorities of the Budget:

The Union Budget 2024-25 centers around nine critical priorities, which include:

1. Productivity and Resilience in Agriculture
2. Employment & Skilling
3. Inclusive Human Resource Development and Social Justice
4. Manufacturing & Services
5. Urban Development
6. Energy Security
7. Infrastructure
8. Innovation, Research & Development
9. Next-Generation Reforms

Priority 1: Productivity and Resilience in Agriculture: Agriculture is crucial, supporting 42.3% of India’s population and contributing 18.2% to the GDP. The budget allocates ₹1.52 lakh crore to this sector, aiming to improve food security, enhance farmers’ income, and promote sustainability and climate resilience in farming.

Key initiatives include:

• Agricultural Research Transformation: Revamping research to develop 109 new climate-resilient crop varieties and support public-private research initiatives.
• Natural Farming: Supporting 1 crore farmers in adopting natural farming with the setup of 10,000 bio-input resource centers.
• Self-Sufficiency in Pulses and Oilseeds: Strengthening production to reduce imports.
• Digital Infrastructure for Agriculture: Implementing digital platforms to provide farmers with information on crop health, insurance, and market trends.

Priority 2: Employment & Skilling: With a vision to harness India’s demographic dividend, the budget focuses on employment generation and skilling initiatives. ₹2 lakh crore is dedicated to the Prime Minister’s Package, which will benefit over 4.1 crore youth through various schemes.

Key Schemes:

• Employment Linked Incentive Schemes: These include incentives for employers to hire new employees and subsidies for hiring in specific sectors like manufacturing.
• Skilling Initiatives: A ₹60,000 crore centrally sponsored scheme will skill 20 lakh youth, upgrading 1,000 Industrial Training Institutes (ITIs).
• Support for Women: The government will provide hostels and creches for working women, along with loans for skilling and education.

 

Priority 3: Inclusive Human Resource Development and Social Justice: This priority focuses on ensuring inclusive growth for all sections of society. The budget proposes a “saturation approach,” ensuring no eligible individuals are left out of government programs for education, health, or economic activities.

Key measures include:

• Purvodaya Initiative: A focus on developing the eastern region of India to drive economic growth.
• Women-Led Development: Allocating over ₹3 lakh crore to support women’s health, nutrition, and education.
• Education, Healthcare, and Housing: Substantial increases in funding for these sectors, supporting inclusive development.

Priority 4: Manufacturing & Services: The government has allocated ₹1.5 lakh crore to support MSMEs, improve credit access, and reduce compliance burdens. Additionally, the Production Linked Incentive (PLI) Scheme will continue to receive investment to boost domestic manufacturing in key industries.

Key highlights:

• MSME Credit Support: The introduction of a new credit assessment model and support for MSMEs during financial stress.
• Manufacturing Boost: Industrial parks will be developed across 100 cities, and rental housing will be provided for workers in these areas.

Priority 5: Urban Development: Urban development is another key focus, with plans to invest ₹10 lakh crore in building affordable housing and improving water supply, sanitation, and waste management.

• Urban Housing: Investment in 1 crore new houses for middle-class and poor families.
• Transit-Oriented Development: Formulating plans for 14 major cities to promote development around transit systems.

Priority 6: Energy Security: The budget has allocated ₹1.5 lakh crore for renewable energy projects, aiming to ensure energy security and balance employment, growth, and environmental sustainability.

Key schemes:

• Surya Char Mutt Bijli Yojana: Providing free electricity to 1 crore households via rooftop solar panels.

 

Priority 7: Infrastructure: A massive ₹11.1 lakh crore, or 3.4% of GDP, has been earmarked for capital expenditure. The budget also promotes private sector involvement through market-based financing.

• Pradhan Mantri Gram Sadak Yojana (PMGSY) Phase IV: Providing rural connectivity to 25,000 additional habitations.

Priority 8: Innovation, Research & Development: The government plans to create a ₹1 lakh crore financing pool to drive private sector research and innovation.

 

Priority 9: Next-Generation Reforms: This includes simplifying FDI rules and encouraging the use of the Indian Rupee in international transactions to attract foreign investment.

The budget emphasizes the need for sustained reforms, fostering an environment for growth while ensuring inclusive development and social justice.

 

3.Energy Security and Transition in India’s Union Budget 2024-25

India’s Union Budget 2024-25 presents a robust framework for energy security, aimed at advancing the country’s clean energy transition and economic growth. A notable focus is on achieving 500 GW of non-fossil fuel-based energy by 2030, which would account for 50% of total installed capacity.

1. Pumped Storage and Nuclear Energy: To stabilize the intermittent nature of renewable energy, a Pumped Storage Policy has been introduced to promote energy storage solutions. Alongside, the government is collaborating with the private sector to develop Bharat Small Reactors and Small Modular Reactors (SMRs) to enhance nuclear energy capacities, emphasizing advanced technologies.
2. AUSC Thermal Power and Industry Emission Reduction: The budget outlines a plan to establish an 800 MW Advanced Ultra Super Critical (AUSC) thermal plant, which will significantly improve energy efficiency. In industries, the focus is shifting from energy efficiency to emission reduction targets with a roadmap toward an Indian carbon market.
3. PM Surya Ghar Muft Bijli Yojana: Rooftop solar projects under this scheme are gaining momentum, with plans to provide 300 units of free electricity per month to 1 crore households. However, challenges in state electricity board capacities and grid infrastructure are limiting faster adoption.
4. Support for Electric Vehicles (EVs): The FAME Scheme for EV adoption sees a reduction in funds, though tax exemptions on key EV battery components like lithium and cobalt aim to boost domestic production and lower costs. However, the budget lacks a focus on expanding public electric transport, which is crucial for addressing pollution.
5. Gaps in the Renewable Energy Push: While the budget outlines strong renewable energy ambitions, it misses key areas like wind energy and biogas projects. Inconsistencies in resource allocation across green initiatives may pose challenges to sustainable growth in the energy sector.

 

 

4.Building a Viksit Bharat: Infrastructure as a Catalyst

The Union Budget 2024-25 places a strong emphasis on infrastructure development as a cornerstone for realizing the vision of a developed India. The budget outlines a comprehensive plan that leverages both public and private investments to enhance connectivity, improve urban living conditions, and stimulate economic growth across sectors.

A Record Investment: The government has allocated a substantial sum of Rs 11.11 lakh crore for capital expenditure, representing 3.4% of GDP. This significant investment underscores the commitment to infrastructure development as a key driver of economic progress.

Public-Private Partnerships: To expedite project execution and maximize resource utilization, the government is promoting public-private partnerships (PPPs). Existing mechanisms like the PPPAC and VGF will continue to play a vital role in facilitating large-scale infrastructure projects.

Financing Infrastructure: The budget encourages a diversified approach to infrastructure financing, including increased bank credit, external commercial borrowings, and market-based instruments like InvITs and REITs. These innovative financing tools have proven effective in mobilizing substantial resources for infrastructure development.

Rural Connectivity: The Pradhan Mantri Gram Sadak Yojana (PMGSY) Phase IV aims to connect 25,000 more rural habitations, ensuring all-weather access to essential services. This initiative builds upon the significant progress made in rural road connectivity since 2000.

Urban Development: The budget allocates funds for the construction of additional houses under the PM Awas Yojana, addressing the housing needs of both urban poor and middle-class families. Furthermore, the government plans to promote rental housing, develop cities as economic hubs, and implement transit-oriented development strategies.

Water Supply and Sanitation: To improve urban living conditions, the budget emphasizes the need for better water supply, sewage treatment, and waste management. The government aims to promote bankable projects in 100 large cities, leveraging public-private partnerships and multilateral funding.

Other Initiatives:

• Weekly Haats: The budget proposes to establish 100 weekly markets (haats) annually to support street vendors and boost local economies.
• Stamp Duty Reform: States will be encouraged to reduce high stamp duties, especially for women, to stimulate real estate investment and urban development.

In conclusion, the Union Budget 2024-25 lays a strong foundation for infrastructure development in India. By combining public and private investments, leveraging innovative financing mechanisms, and focusing on key areas like rural connectivity, urban development, and water management, the government aims to create a more inclusive and prosperous nation.

 

 

5.Empowering MSMEs and Manufacturing

The Union Budget 2024-25 has unveiled a comprehensive set of measures aimed at boosting the manufacturing sector and empowering micro, small, and medium enterprises (MSMEs). These initiatives focus on providing financial support, improving access to credit, enhancing infrastructure, and streamlining regulatory processes.

Financial Support and Credit Facilitation:

• Credit Guarantee Scheme: A new scheme offers credit guarantees to MSMEs purchasing machinery and equipment without collateral or third-party guarantees.
• New Assessment Model: Public sector banks will adopt a digital-based credit assessment model to improve access to credit for MSMEs, especially those without formal accounting systems.
• Credit Support during Stress: A government-promoted fund will ensure MSMEs continue to access bank credit during financial difficulties.
• Enhanced MUDRA Loans: The limit for MUDRA loans has been increased to Rs 20 lakh for eligible entrepreneurs.
• TReDS Platform Expansion: The turnover threshold for mandatory onboarding onto the Trade Receivables Discounting System (TReDS) has been reduced, facilitating faster conversion of receivables into cash.

Infrastructure Development and Regulatory Reforms:

• Industrial Parks: Development of plug-and-play industrial parks in 100 cities to promote manufacturing activities.
• Rental Housing: PPP-mode dormitory-type rental housing for industrial workers will be facilitated with viability gap funding.
• Shipping Industry Reforms: Measures to enhance India’s shipping industry and create employment opportunities.
• Critical Mineral Mission: A new mission to promote domestic production, recycling, and overseas acquisition of critical minerals.
• Offshore Mineral Mining: Auctioning of offshore mineral blocks to boost mineral resources.
• Digital Public Infrastructure: Development of digital applications to drive productivity and innovation in various sectors.
• IBC Reforms: Streamlining of insolvency and bankruptcy processes through an integrated technology platform and additional NCLTs.
• Debt Recovery Tribunals: Reforms to strengthen debt recovery mechanisms and expedite recovery processes.

In conclusion, the Union Budget 2024-25 provides a comprehensive package to support the growth and development of MSMEs and the manufacturing sector. By addressing key challenges such as access to credit, infrastructure, and regulatory hurdles, the government aims to create a conducive environment for businesses to thrive and contribute to India’s economic growth.