PrintFriendlyThe 2024 Indian Union Budget holds critical significance for the nation’s economic landscape, offering a glimpse into the government’s fiscal plans and aspirations for fostering an inclusive and resilient economy. This annual presentation provides a roadmap for allocating financial resources, setting the tone for India’s economic journey. Against the backdrop of global and domestic challenges, this year’s budget assumes heightened importance as it aims to address issues such as post-pandemic economic recovery, inflation control, and sustainable development, reflecting the government’s commitment to steering India through uncertain times. The 2024 budget embodies the Indian government’s efforts to bolster economic strength, improve infrastructure, and ensure social equity. With a strong focus on embracing digital advancements, promoting eco-friendly energy initiatives, and uplifting rural regions, the budget seeks to strike a balance between economic growth and environmental well-being. Additionally, measures aimed at bolstering the manufacturing sector, generating employment opportunities, and enhancing healthcare and education systems underscore a commitment to holistic development. As individuals and communities across multiple sectors reflect on the impact of these budgetary provisions, the 2024 Union Budget offers a glimpse into the nation’s path towards economic stability and long-term prosperity, signaling a collective aspiration to build a better future for all.
The Union Budget of 2024 puts a significant focus on bolstering infrastructure development in India, with a staggering allocation of INR 11.11 lakh crore, which amounts to 3.4% of the GDP. This allocation marks the highest ever investment in this sector and is aimed at boosting the competitiveness of the manufacturing industry and supporting crucial industrial corridors like the Amritsar-Kolkata and Vizag-Chennai Industrial Corridors. Additionally, a considerable portion of this funding will be directed towards establishing new industrial parks and enabling ecosystems, with the National Industrial Corridor Development Corporation (NICDC) spearheading the promotion of 12 new industrial zones. Moreover, the budget emphasizes addressing industrial housing in peri-urban areas by supporting worker housing through public-private partnerships (PPPs). To further promote balanced urban development, there are initiatives planned for economic and transport planning that will prioritize Tier 2 and Tier 3 cities, thus alleviating pressure on major urban centers. In this regard, the introduction of Transit-Oriented Development (ToD) projects in 14 cities is set to integrate various modes of transport infrastructure like metros and airports to facilitate economic growth. Furthermore, the budget outlines schemes such as a credit guarantee scheme and the establishment of e-commerce export hubs for Micro, Small, and Medium Enterprises (MSMEs) to stimulate demand and bolster India’s target of achieving USD 1 trillion in exports by 2030.
In the energy sector, the budget lays out a comprehensive strategy encompassing the entire energy value chain, focusing on managing and reducing energy demand, enhancing resource efficiency, and fortifying energy security. Special attention is given to energy transition and the utilization of indigenous technologies, including advancements in nuclear reactor technology. Climate finance and the development of carbon markets feature prominently in the budget, with substantial investments allocated towards initiatives such as the solar rooftop mission to reduce energy costs for consumers. India’s commitment to investing over USD 130 billion in infrastructure and climate-related sectors in the upcoming fiscal year underscores the nation’s dedication to climate change mitigation and adaptation efforts. Notably, the budget allocates over INR 1.5 lakh crore towards the agriculture sector to drive productivity enhancements, climate resilience, and technological innovations. The introduction of a National Cooperation Policy and the promotion of collaborative research with private sector entities signal a strong commitment to revolutionizing the agricultural landscape. Moreover, strategic support for pulses and oilseeds aligns with the government’s objective of achieving self-sufficiency in key agricultural commodities.
In the realm of education, the budget reflects a substantial increase in funding for both school and higher education initiatives. For school education, there is a notable 7% increase in allocation, with a significant 10% rise for the Samagra Shiksha scheme. The PM Shri scheme witnessed a substantial surge in funding to INR 6,000 crore, doubling its previous allocation to enhance the accessibility of quality education across the nation. On the higher education front, there is an increment in funding for institutions from INR 1,300 crore to INR 1,800 crore, with a specific focus on developing top-tier educational establishments. Teacher training and research funds receive a boost of 25%, accompanied by support for digital learning initiatives. Despite a reduction in the budget for the University Grants Commission (UGC) from INR 6,400 crore to INR 2,500 crore, which could potentially impact grants to public universities, increased allocations for research and development in the private sector are anticipated to have a positive impact on university research endeavors. Additionally, the budget introduces new measures to enhance access and employability in education, such as interest subvention for education loans for 100,000 students and a 40% increase in financial aid to INR 1,900 crore. A novel scheme for paid internships aims to equip one crore youth with industry-relevant skills, alongside providing enhanced apprenticeship opportunities.
In a bid to enhance job creation and workforce engagement, the Union Budget 2024 unveils a wage support initiative offering up to Rs 15,000 for EPFO-registered first-time employees. This scheme aims to catalyze the integration of workers into the formal economy. Furthermore, the budget includes incentives for EPFO contributions in the manufacturing sector, fostering growth in this critical industry. A novel reimbursement program is introduced to provide up to Rs 3,000 monthly per new employee for employer EPFO contributions over two years. These combined efforts are poised to not only generate fresh job opportunities but also foster sustained employment growth. Acknowledging the necessity for upskilling to align with industry demands, the budget proposes an extensive plan to upgrade 1,000 industrial training institutes over the next five years. This enhancement is designed to augment the institutes’ capacity to deliver specialized skills. Additionally, a new internship scheme is introduced to benefit one crore young individuals, offering them practical work experience with renowned companies. Interns will receive a monthly stipend of Rs 5,000 along with a one-time aid of Rs 6,000 to bolster their professional development. This initiative incentivizes corporate involvement, with companies expected to cover training expenses and contribute 10% of the internship outlay from their CSR funds. These initiatives are set to enhance the convergence between educational outcomes and industry. The budget delineates a targeted growth and improvement strategy for specified states, including Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. Substantial financial backing is allocated to elevate human resources, infrastructure, and economic potentials in these regions. Notably, Andhra Pradesh is designated to receive Rs 15,000 crore for the establishment of a new capital city, showcasing the government’s dedication to infrastructure and regional growth. This focused assistance aims to mitigate regional inequalities and bolster state-level progress.
Small and Medium Enterprises (MSMEs) play a pivotal role in India’s economic advancement and employment creation. The budget introduces a credit guarantee scheme to streamline term loan accessibility for MSMEs to acquire machinery and equipment without necessitating collateral. A self-sustaining guarantee fund will be instituted, offering coverage up to Rs 100 crore. Additionally, the Mudra loan ceiling is raised from Rs 10 lakh to Rs 20 lakh for entrepreneurs who have previously availed and repaid loans. These measures are crafted to empower MSMEs by facilitating easier credit access, thereby enhancing their operational capabilities and growth prospects. A comprehensive strategy is outlined in the budget to combat high carbon emissions by establishing emission reduction objectives and advocating sustainable practices. Investments in emerging nuclear energy technologies, in partnership with the private sector, are planned to bolster a more eco-friendly and sustainable energy framework. These initiatives align with global environmental preservation endeavors and strive to boost energy efficiency. The emphasis on these advancements underscores a commitment to transitioning towards cleaner energy sources and curbing the nation’s carbon footprint. Agricultural progress takes center stage in the budget, with blueprints to overhaul research infrastructures for heightened productivity and the promotion of climate-resilient crop strains. The creation of vegetable production clusters in proximity to major consumption hubs is anticipated to refine supply chain efficiencies and bolster local agricultural economies. Moreover, the formulation of a national policy for cooperative sector advancement underscores the government’s resolve in enhancing cooperative farming methodologies and uplifting farmers’ livelihoods. These reforms aim to fortify the agricultural sector’s resilience and productivity.
Urban and rural development undertakings in the budget are tailored towards elevating living standards and infrastructure nationwide. A transit-oriented development blueprint will be crafted for 14 major cities with populations surpassing 30 lakh, emphasizing sustainable urban planning and efficient transportation systems. Measures to reduce steep stamp duties, particularly beneficial for women property purchasers, are also introduced. Under the Pradhan Mantri Awas Yojana, an additional three crore residences will be erected in both rural and urban areas, mitigating housing shortages and furnishing affordable solutions for the underprivileged. These endeavors seek to foster comprehensive urban and rural progress.
Tax Proposals
The Union Budget 2024 introduces significant changes to the taxation of capital gains. Short-term capital gains tax on listed equity shares, equity mutual funds, and REITs/INVITs is set to increase from 15% to 20%, aligning these gains more closely with other asset classes. Long-term capital gains will now be taxed at a uniform rate of 12.5%, replacing the previous rates of 10% for listed assets and 20% with indexation for non-listed assets. The removal of indexation for properties, gold, and other unlisted assets may lead to an increased tax burden on these investments. Financial assets held for over a year will be considered long-term, while non-financial assets will require a two-year holding period to attain this status. Furthermore, the exemption limit for long-term capital gains from listed equity shares, equity mutual funds, and business trusts is set to rise from Rs 1 lakh to Rs 1.25 lakh. Share buybacks will now be taxed similarly to dividends, showcasing a broader shift in the tax treatment of capital returns.
The budget proposes an increase in the Securities Transaction Tax on options and futures transactions. The STT on options will be raised from 0.0625% to 0.1% of the option premium, while the tax on futures transactions will increase from 0.0125% to 0.02% of the trading price. These adjustments aim to bolster government revenue from financial market activities and could impact the trading strategies of market participants by elevating the cost of trading. Noteworthy revisions to TDS rates are outlined, incorporating reductions across various categories. The TDS rate is slated to decrease from 5% to 2% for insurance commission, life insurance policy payments, rent, and commission or brokerage. Additionally, the TDS on e-commerce transactions is set to decrease from 1% to 0.1%, signaling an effort to alleviate compliance burdens on e-commerce operators and participants. These changes are anticipated to lower the tax withheld at source for these transactions, potentially enhancing liquidity for individuals and businesses. A novel scheme, the Direct Tax Vivad Se Vishwas Scheme, 2024, is proposed to streamline the resolution of tax disputes by providing leniency in the payment of disputed interest or penalties. This scheme is designed to expedite the resolution of tax conflicts, offering a mechanism for taxpayers to settle disputes with reduced financial penalties and interest, thereby encouraging timely compliance and the resolution of outstanding issues.
The budget outlines the removal of the equalization levy on non-resident e-commerce operators effective from August 1, 2024. Currently set at 2% of the proceeds received, this levy was intended to tax digital services provided by foreign entities. Its removal indicates a potential shift in the approach to taxing international e-commerce transactions and may reflect broader changes in global tax agreements. Customs duties undergo adjustments for a variety of goods, with reductions for items such as gold, silver, and mobile phones, including their chargers and adapters. Certain materials used in the textile, steel, and capital goods sectors receive exemptions from customs duty in a bid to reduce production costs and stimulate these industries. Conversely, increases are announced for solar glass and specific chemicals, potentially impacting the cost structure of industries reliant on these materials. The budget eliminates the tax on unlisted companies receiving funds exceeding the face value of their shares. This tax, previously imposed to curb inflows that could inflate share valuations, will no longer apply, potentially easing funding conditions for startups and small companies seeking investment. Movable assets valued up to Rs 20 lakh are exempt from penalties under the Black Money Act, 2015, for non-declaration of foreign assets. This exemption aims to reduce compliance burdens for individuals who may have overlooked declaring such assets, reflecting a more lenient stance on foreign asset disclosure. A new provision under the Prohibition of Benami Property Transactions Act, 1988, offers immunity to benamidars who turn approvers, incentivizing cooperation in uncovering illegal transactions. This provision targets the accountability of both the benamidar and the beneficial owner, aiming to strengthen enforcement against illicit property transactions.
Budget Estimates
In the upcoming fiscal year 2024-25, the government has laid out a substantial budget allocation of Rs 48,20,512 crore, indicating an 8.5% increase from the previous year’s actuals. This growth is propelled by a noteworthy 17.1% surge in capital expenditure, while the rise in revenue expenditure is contained at 6.2%, maintaining consistency with prior allocations for critical sectors such as pensions, defense, and major schemes like MGNREGS and Jal Jeevan Mission. Total receipts, excluding borrowings, are anticipated to reach Rs 32,07,200 crore, signifying a significant 15% upturn from the preceding fiscal year. To bridge the fiscal gap between these receipts and the expenditure, borrowings are earmarked at Rs 16,13,312 crore, representing a slight 2.4% decrease from the previous year’s figures. Regarding financial transfers to states and union territories, the central government aims to allocate Rs 23,48,980 crore, marking an 11.9% increase over 2023-24. This comprises Rs 12,47,211 crore from central taxes and Rs 11,01,769 crore in grants. The budget sets its sights on reducing the revenue deficit to 1.8% of GDP from the previous year’s 2.6%, and targets a decrease in the fiscal deficit to 4.9% of GDP, down from 5.6%. This reduction in the fiscal deficit is primarily attributed to the 15% growth in receipts outpacing the 8.5% rise in expenditure. The nominal GDP is predicted to grow by 10.5%, reflecting an optimistic economic outlook for the upcoming year.
The fiscal year 2024-25 Union Budget exemplifies a balanced strategy to boost economic growth while upholding fiscal discipline. By increasing capital expenditure to enhance infrastructure and vital sector investments, the government emphasizes its dedication to long-term economic advancement. The controlled growth in revenue spending, alongside substantial investments in state and union territory transfers, highlights a commitment to fair resource allocation. The projected uptick in total receipts and the strategic cuts in fiscal and revenue deficits showcase a methodical approach to public finance management. The expected 10.5% growth in nominal GDP signifies a promising economic path, paving the way for a more resilient and dynamic economic landscape. Overall, the budget mirrors the government’s aspirations of nurturing sustainable growth with fiscal prudence, positioning India for ongoing advancement in the coming year.