Union Budget 2024: Finance Minister Nirmala Sitharaman sets ambitious goals for 'Viksit Bharat'
- In Economics
- 09:37 PM, Jul 23, 2024
- Myind Staff
Finance Minister Nirmala Sitharaman presented the Union Budget 2024 in Parliament today, marking her seventh consecutive budget, a record surpassing the late Morarji Desai’s six consecutive budgets. This budget, the first major economic document of Prime Minister Narendra Modi’s third term, aims to transform India into a 'Viksit Bharat' by 2047.
India’s GDP growth in fiscal 2024 was 8.2%, surpassing last year’s Economic Survey projection by 170 basis points. Improved tax collections and extra dividends from the Reserve Bank of India (RBI) have increased fiscal space. The budget proposes lowering the fiscal deficit to 4.9% of GDP for FY25, down from 5.1% in the interim budget, with a goal to reach 4.5% by the end of next year. The capex outlay for infrastructure is set at ₹11.1 lakh crore, unchanged from the February interim budget, and the gross market borrowing target is reduced to ₹14.01 lakh crore from ₹14.13 lakh crore announced in the interim budget.
Ms. Sitharaman announced three new schemes costing the government ₹2 trillion ($24 billion) over the next five years. First-time job entrants in the formal sector will receive a direct cash transfer equivalent to their monthly salary, up to a maximum of ₹15,000, in addition to their first month's pay. Furthermore, two programmes aimed at boosting manufacturing jobs will provide employment-linked incentives to both employees and employers.
The burgeoning start-up ecosystem will benefit from the abolition of the angel tax on capital raised by private companies. Minor tweaks in personal income taxes are expected to result in savings of up to ₹17,500 ($209) for those opting for the new tax regime, and the corporate tax on foreign companies has been reduced from 40% to 35% to promote investments.
Changes in the income tax structure include new slabs for the new regime, with rates ranging from 0% for income up to ₹3 lakhs, 5% for people with income between ₹3 - ₹7 lakhs, 10% for ₹7 - ₹10 lakhs, 15% for ₹10 - ₹12 lakh, 20% for ₹12 - ₹15 lakh and 30% for people with income above ₹15 lakh. For those opting for the new tax regime, the standard deduction for salaried employees increases from ₹50,000 to ₹75,000, and the capital gains exemption limit is raised to ₹1.25 lakh per year for the middle and upper middle class. All rental income from residential properties will now be taxed under 'income from house property' instead of 'profits and gains of business or profession'.
The budget also sought to address spending demands from the BJP's key regional allies, Janata Dal (United) of Bihar and Telugu Desam Party (TDP) of Andhra Pradesh, which hold 28 seats in India’s lower house. Financial support of ₹150 billion was announced for the development of Andhra Pradesh’s capital, with a promise for more funding in the coming years. A slew of new airport, road, and power projects were sanctioned for Bihar.
Adjustments in customs duties include reductions for items such as mobile phones, chargers, and accessories, with a duty cut to 15%, and reductions for gold and silver to 6%, and platinum to 6.4%. Certain cancer treatment medicines are exempt from basic customs duty, and duties on shrimp and fish feed are reduced to 5%. Additionally, leather goods and critical minerals see reduced or exempted duties. However, duties have increased for specified telecom equipment to 15%, plastic products and ammonium nitrate to 10%, and imported garden umbrellas and laboratory chemicals.
Sectoral focuses include nuclear energy, with an emphasis on developing small reactors and involving the private sector in setting up nuclear plants. The Delhi Police are allocated ₹11,400.81 crore, a 6% decrease from the last fiscal, to be used for routine expenses and various schemes. Housing receives a significant boost, with ₹10 lakh crore allocated to provide one crore houses to the urban poor and middle class, along with a new rental housing scheme for the working class. Youth employment and skilling are incentivised, aiming to create employment for 4.1 crore youth over the next five years with an allocation of ₹2 lakh crore. Additionally, ₹1.48 crore is allocated for skilling 20 lakh youth over five years, and 1,000 industrial training institutes will be upgraded.
Strategic initiatives focus on agriculture, human resource development, urban development, infrastructure, energy security, and innovation and research development. Finance Minister Nirmala Sitharaman’s Union Budget 2024 aims to balance economic growth with fiscal responsibility while setting a transformative agenda for India's future. The budget's focus on tax reforms, infrastructure, employment, and sectoral growth underscores the government's commitment to achieving 'Viksit Bharat' by 2047.
Image source: PTI
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