India is on a solid path of economic growth, with GDP expected to rise by approximately 6.5-7% this fiscal year. The country has successfully navigated global economic challenges and minimized their impact. The new budget marks a pivotal moment in the nation’s economic trajectory, aimed at fostering sustainable growth, enhancing infrastructure, and addressing socio-economic disparities. With significant allocations towards green energy and rural development, the government’s fiscal plan seeks to balance immediate recovery needs with long-term developmental goals, setting the stage for a robust and equitable future.

In this article, we will focus on some of the key points of the 2024 Budget including both the Budget Priorities and Tax Modifications.

Budget Priorities:

The Budget theme mainly focuses on Employment, Skilling, MSME’s and Middle Class. Let us see the Budget priorities in a bit detail:

– Employment & Skilling.

Government introduced 3 schemes for employment link incentive. The Prime Minister’s package, comprises of five key schemes and initiatives aimed at creating substantial employment and skilling opportunities. This ambitious package is set to benefit 4.1 crore youth over the next five years, backed by a central outlay of Rs.2 lakh crore.

• Scheme A: One Month’s Wage for Fresher

This initiative provides a one-month wage upon joining the formal workforce, supported by a direct benefit transfer (DBT) equivalent to one month’s salary (up to Rs.15,000) disbursed in three instalments.

• Scheme B: Job Creation in Manufacturing

By targeting first-time employees, this scheme incentivizes job creation in the manufacturing sector.

• Scheme C: Support to Employers

Expected to benefit 30 lakh youth and additional employment across all sectors, this scheme reimburses employers up to Rs.3,000 per month for two years for each additional employee’s EPFO contribution.

• Scheme D: Setting up Industrial Training Institutes

Centrally sponsored scheme announced for skilling 20 lakh youth over five years in collaboration with state governments and industry, along with upgrading 1,000 Industrial Training Institutes to align with industry skill needs.

• Scheme E: Internship Opportunities

Offering internship opportunities to one crore youth in 500 top companies over the next five years, providing exposure to real-life business and professional environments.

The Union Budget 2024 places a significant focus on employment-linked schemes, setting a new precedent for prioritizing job creation and skilling in our nation. This landmark budget introduces innovative approaches to directly link incentives with employment generation, ensuring that economic growth translates into real, tangible opportunities for our youth.

– Micro small & Medium Scale Enterprise (MSME).

This budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing.

• Credit Guarantee Scheme for MSMEs in the Manufacturing Sector

A separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to Rs.100 crores, while the loan amount may be larger.

• New assessment model for MSME credit

Similarly, Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.

• Credit Support to MSMEs during Stress Period

Also, a new mechanism to be created for facilitating continuation of bank credit to MSMEs during their stress period.

• Mudra Loans

The limit of Mudra loans will be enhanced to Rs.20 lakhs from the current Rs.10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.

• MSME Units for Food Irradiation, Quality & Safety Testing

Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided.  Setting up of 100 food quality and safety testing labs with NABL accreditation will also be facilitated. To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public-private-partnership (PPP) mode.

– Infrastructure

Government will endeavor to maintain strong fiscal support for infrastructure over the next 5 years, in conjunction with imperatives of other priorities and fiscal consolidation. Rs.11.11 lakh crore for capital expenditure has been allocated this year, which is 3.4 per cent of our GDP. Phase IV of Pradhan Mantri Gram Sadak Yojana to provide all weather connectivity to 25,000 rural habitations. Investment in infrastructure by private sector will be promoted through viability gap funding and enabling policies and regulations. A market-based financing framework will be brought out.

– Productivity and resilience in Agriculture

The government will undertake a comprehensive review of the agriculture research setup to bring the focus on raising productivity. Government, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years.

– Urban Development

Under the PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of Rs.10 lakh crore. Government envisions a scheme to support each year, over the next five years, the development of 100 weekly ‘haats’ or street food hubs in select cities.

– Energy Security

PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain free electricity up to 300 units every month. Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat.

– Innovation, Research & Development

Starting Anusandhan National Research Fund for basic research and prototype development and set up a mechanism for spurring private sector-driven research and innovation at commercial scale with a financing pool of Rs.1 lakh crore in line with the announcement in the interim budget. Rs.1000 crore Venture Capital Fund for Space economy will be set up.

– Inclusive Human Resource Development and Social Justice

Schemes such as PM Vishwakarma, PM SVANidhi,  National Livelihood Missions, and Stand-Up India assisting craftsmen, artisans, self-help groups, scheduled caste, schedule tribe and women entrepreneurs, and street vendors will be stepped up.

– Next Generation Reforms

Government will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation.

Tax Modifications:

New Tax Regime

The Budget 2024 has revised the tax slabs in the New Regime, providing taxpayers with an extra opportunity to save Rs.17,500 in taxes. Additionally, the standard deduction has been raised to Rs.75,000 under this regime and the family pension deduction has been increased to Rs.25,000 from Rs.15,000. This is applicable for the FY 2024-25. 

Let us see the comparison between the tax slabs post-budget and pre-budget is as follows:

Old Tax Regime

The old tax regime has been kept unchanged. Snapshot for the old tax regime is as follow:

Capital Gain Taxation

Below is the summary for Capital gain taxation post Budget 2024:

Exemption of Long Term Capital Gains on the transfer of equity shares or equity-oriented units or units of Business Trust has been increased from Rs.1 lakh to Rs.1.25 lakhs per annum.

Conclusion:

The government has ensured policy continuity. Overall, the budget reflects a balanced approach to fiscal policy, promoting economic equity and encouraging investment while maintaining fiscal prudence. The multiplier effect of the measures announced is expected to fructify in the coming years. Thus, the Budget lays the foundation for a resilient, stronger, more self-reliant India that can lead on a global stage.

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The article is authored by Mr. Saurabh Gosavi from Team RichVik.