Transcript for:
Union Budget 24-25 Overview and Insights

hello good evening and welcome to unacademy IAS a onetop destination for all the English medium civil services aspirants welcome to a detailed discussion where me as well as Chan sir will be taking up the important announcements done by the Finance Minister in today's Union budget for the financial year 24 and 25 we will not only take up the topics we will also have a detailed discussion regarding the importance of the announcement but before we take up the let's say the areas the Finance Minister today has presented her seventh consecutive Union budget which is the other finance minister or which is the Finance Minister who has presented the highest number of budgets for Union government of India if you know the answer please do let us know in the comment section now before I hand over the discussion to Chan sir this is my personal view regarding what is the overview of the budget the budget is inclusive in nature it has certain provision for everybody some are good and some are equally bad especially if you're an investor in the stock market or if you want to sell your house in the coming days it has Provisions for women it has Provisions for youth of India it has provision for Industries manufacturing service sector msme Etc it is overall inclusive budget second it is grounded in reality by looking at how much is the fiscal space available to the government they have allocated the spending or the expenditure to various schemes and they have been able to maintain the fiscal Prudence at the same point of time by targeting the fiscal deficit Target of 4.9% for Current financial year and 4.5% for the next financial year and I believe that the budget has all the right elements to take us to the path of developed economy by the year 2047 but chadan s according to you what is the Viewpoint of the budget I think you summed it up very well sir the way I look at it the budget does have some plus points there are some minus points as well for example as you said it's a well-balanced budget it does focus on the right areas especially with regard to putting India on the right path to become a developed country by 2047 for example the key areas like next Generation technology has been prioritized be it our green transition with focus on small nuclear modular reactors or be it the focus on renewable clean energy I think that puts India on the right path not just to reduce its emissions and meet our climate change targets but it does help India to leverage all the critical emerging Technologies as well and second uh I think it is a welfare oriented budget uh there are some Progressive elements to it it does focus on various welfare schemes be it for women be it for uh the youth especially in the employment sector in Skilling there's a lot of priority given for these areas um and also it's a inclusive budget be it the scheduled tribes and U the other weaker sections there is even for the Northeast region there is adequate Focus but on the downside the first concern is the opposition has already labeled this as a Bihar Andra budget it's not a union budget because as you can see it's very evident that Coalition politics is at play and uh as we had discussed in a previous session what will Bihar get what will Andra Pradesh get they didn't get any major cabinet seats uh they were expecting a special category status which was never met so now that the budget is out it's very clear it a financial reward which had been promised for the Coalition Partners so this raises questions on fiscal federalism because other states are now concerned that they are not getting a fair Equitable share so I think that would be a downside with regard to the impact on fiscal federalism and uh also for taxpayers like us salary taxpayers not much of a benefit uh the government claims that we might save 177,000 OD rupees but I don't think it would be that substantial sir okay so uh let's start with the discussion sir let's get started with with the discussion uh sir one thing which really caught my attention was when Finance Minister began Her speech she spoke about the challenges that are present in the global economy because obviously in a globalized economy India would also be hit by the global adverse developments and nirmala sitaraman has flagged specific concerns like elevated asset prices and commodity prices this could be outcome of the conflicts the disruption in Supply chains and the overall political uncertainities triggered by the Ukraine war the Gaza war and also the chaos in American democracy as well plus the ministry has finance ministry has specifically referred to shipping disruptions in the Red Sea and its likely impact on global Shipping and commodity prices so Finance Minister has flagged a downward uh concern a downward pressure on growth and upward pressure on inflation so that is something India should watch out for in the coming fiscal uh sir I would like uh to ask you to shed some light on these Focus areas of forecast that Finance Minister spoke about the government of India in the recent budgets has been laying out certain very important priority areas and in the interim budget same argument of four casts or the four very important let's say the areas or the specific targets of the government of India where four those are one garib that is basically the poor people various reforms have been implemented government wants to continue implementing the the reforms and just to add a point here even the economic survey which has been published yesterday says that the number of poor in case of India have actually come down in the last couple of years second very important area of concern or let's say the focus of the government of India has been mahila or women you'll see multiple reforms announced by the government in the previous year budgets as well as this year's budget including the interim budget mind you where the focus area has been women for example there has been a talk regarding the reduction in the lfpr women labor force participation rate there has been a talk regarding more empowerment of the women in fact last year I remember an article sir where government of India has set up a committee to look at the gender budgeting right what should be the revamping of the gender budgeting which is again associated with women empowerment third important area is youth or Yash shaki one area where India has to harness the area of a demographic dividend to harness the demographic dividend we have to Target youa shaky and in recent times there has been a lot of discussion regarding whether are we utilizing our youth efficiently in the sense are our educated youth do they have the right skill set right are they getting sufficient number of jobs in the market and that is exactly what has been done by the government in the present budget which was announced today lot of reforms lot of measures have been taken to not only ensure we have a skilled youth population but also to ensure sufficient number of jobs are created because essentially we have to ensure that there's a supply as well as a demand in the employment Market correct sir and the fourth area is basically our Farmers anadas the government historically not just only this government but other governments also they have implemented lot of reforms to address the issues faced by the farmers even in the yesterday's published economic survey the survey has talked a lot regarding how can we empower the farmers how can we ensure the farmers are able to earn better Etc and the same Focus has been continued even in the budget reforms have been announced in order to promote vegetable production yeah reforms have been announced to ensure processing is done reforms have been announced to ensure that we are self-reliant in the context of pulses oil sedes and even there is a discussion regarding or the point or the announcement regarding identifying certain number of farmers and making them promote natural farming right sir so these are the four very important cast and there is a focus sufficient number of announcements have been done in each of these categories and uh what is notable is that so the budget speech of the Finance Minister talks about the cont contribution of farmers as well how farmers are contributing to our food security it mentions the Ania Ana how nearly 80 CR beneficiaries are covered and accordingly agriculture sector has got a degree of priority I believe yeah and also sir since we were talking about the focus areas uh there are four specific themes that the Finance Minister spoke about as Shamar was discussing the top Focus has been employment and Skilling yes to ensure that we reap the advantage of our demographic dividend in when the Finance Minister started discussing the reforms the first area of focus that the Finance Minister discussed was agriculture agriculture yeah second area focus of discussion on the announcement was employment and and Skilling I think that shows the priority of the government as well yes then comes msme sector we have lot of initiatives and uh promotional uh initiatives which have been announced for msme industry and of course there is some focus on middle class mid class right so let's take a look at this let's take a detailed look at all the priority areas yeah these are the nine priority areas what me and Chan sir will be doing is one after the other we'll be discussing each one of them let me start the discussion let me kick off the discussion with the most important area which I'm pretty sure most of you are waiting with with let's say lot of intent is the area of Taxation multiple reforms have been announced some are very good to a certain extent good for the salaried class some are right in the sense are not on the expected lines of the market which in fact is shown by the market where many of the shares took a beating because of the announcement in fact both nifties and sex both are down and that indicated and basically that was because of one of the announcements that the government of India has done that is regarding the capital gains tax which I'll come to in some time the first is income tax slabs have been changed in fact yesterday I had a discussion regarding the top 10 budget expectations and the expectation as most of the experts were mentioning the government had to make certain changes regarding income taxes reason being there is a narrative which says that there is lesser demand in the market there needs to be an impetus provided for more and more goods and services to be purchased by the consumers by you by me and by every one of us basically to boost consumption yes and the best way to boost the consumption in the market is tweak the income taxes reduce the income taxes so that automatically the amount of expendable income increases and that will contribute to the demand in the market so in that regards the government of India has made certain changes for the income tax lab earlier please understand there are two income tax Labs one old tax regime and the other one is new tax regime earlier that is before the announcement for 0 to three lakh the tax rate was was Zero 3 to 6 lakh it was 5 6 to 9 lakh it was 10 9 to 12 lakh it was basically 20 and so on and so forth what the government of India has done is they have changed the tax rates now they basically change the slabs which is applicable on these numbers for example earlier it was 3 to 6 lakh rupees it has been changed to 3 to 7 lakh rupees from 6 to 9 it has been made 7 to 10 lakh rupes so on and so forth in essence by changing the income tax slabs and if you ask me sir should we remember all of these slabs I would simply say for a civil servant or aspirant all of this is not required all you need to the aspirant is working is a salar professional they would be concerned about this number this one as well as the the standard deduction definitely yes if you are a salaried person definitely yes all you need to understand is the slabs have been tweaked in such a way that instead of 3 to 6 now it is 3 to 7 which will basically ensure that you'll be able to pay lesser amount of a tax overall when the income taxes are calculated the Finance Minister says that with this kind of a tweaking in the income tax structure a taxpayer will be able to save somewhere in the range of 17,500 rupees 17,500 rupees so essentially it means the buyer or let's say the income tax payer now will have more of money to spend in the market that's the first very important change second very important change which was expected by the government is an angel taxel tax essentially the concept of Angel tax was announced back in the year 2012 finance bill pranam mukarji was the finance minister at at that point of time the whole idea of introducing Angel tax was the government was worried that there was a money laundering lot of black money was getting circulated into the startups in invested into the equity of startups to address that issue government announced Angel tax but the concern was it was implemented post 2016 in India lot of these startups raised a concern regarding its calculation the amendments were introduced by the government to amend Angel tax the impact of Angel tax but even then many of the taxpayers were concerned especially the startups it was in fact considered to be very Draconian in many of the cases start UPS complain that the amount of tax demand which has been raised is more than the funding they have received and the amount was raised or it was so high because of penalties interest as well as the tax notice tax notice yeah so finally the before the budget was announced in fact the dpit one of the Departments of the government basically battered in favor of scrapping of the Angel tax and the Finance Minister today has announced a scrapping of Angel tax now just just to in you uh the abolition of Angel tax will it again bring back the concern of moneya laundering there are multiple ways through which because please understand this was announced back in the 2012 right and the current situation is that there's a startup funding winter the startups are starved they are they're basically not able to find sufficient finances post the pandemic recovery right so this will make startup Founders very happy this will definitely would have made the startups very very happy because this has been a longstanding demand demand yeah that is a reason so one is Angel tax now in fact in case of Angel tax please remember the section number that can be asked in the civil services it was introduced under Section 56 of it Act of 1961 it Act of 1961 third very important announcement which most of you or the saled people will be happy standard deduction has been increased the standard deduction which was 50,000 Rupees has been increased to 75,000 rupees in fact it was expected to be increased to 1 lakh which essentially means now the taxable income will go down by 25,000 rupees right people will have more money because they'll pay lesser amount of tax to government in fact the beauty of standard tax is that you do not have to pay any kind of a proof of investment to claim this particular deduction rate otherwise any deduction that you want to claim you have to submit lot of documentation which becomes lot of paperwork yes so sir are you happy with the tax reduction as a salaried employee I would have expected much more in fact in case of income taxes in fact most of the experts expected much more would be provided to a middle class person not to poor people middle class person because hardly around 2 CR people hardly around 2 CR people actually pay income taxes in India so middle class people expected a lot in terms of income tax changes even in standard deduction like I said we expected it to go up to 1 L rupees next one capital gains tax modified this is a very interesting Concept in case of India capital gains tax since introduction has been changed and chopped so many times there are been there there have been lot of complications regarding the capital gains for example if you have a listed share capital gains tax in that case will be imposed on 12- month basis right if you have unlisted share 24 months if you have invested in a Reit real estate investment trust it will be implemented based on 36 month period either more than 36 months longterm less than 36 shortterm so the concept of capital gains tax was very complicated right Market expected lot of changes to be done in case of capital gains what government of India has done and that's the reason Market is unhappy it has increased the capital gains tax rather than providing relief it has increased the capital gains for short-term capital gains it has increased from 15 to 20% for long-term capital gains it has increased from 10 to 12 half% now many of many of the people will basically say Okay capital gains tax this is a problem then is it the only reason why the market has behaved this way you have a derivative market futures and options in the Futures and options also the security transaction tax has been increased by the government it could also be because sir off late a lot of Youth have gotten into fno trading even though they don't understand what future yes that could be one of the reason because Reserve Bank of India has raised a concern regarding this sebi has raised a concern regarding this reason is no doubt if you make money in the derivative Market you will make a huge amount of money but it is just a minute number of people most people end up losing money in the F Ando because they speculate exactly high so the government wants to reduce the amount of speculation that takes place in the F market and that is one of the reason why the Market is not behaving favorably to this concept of a change in the capital G in fact there is one more reason as well the government earlier had a concept of indexation if you sell a fixed asset now this indexation for a land has been removed which essentially means earlier if I sold my land after owning for let's say 10 years I could adjust the price for inflation that would reduce the price uh that is that will reduce the capital gains and the amount amount of taxes I pay now government has removed indexation benefit and that will mean that I will not be getting indexation my capital gains would be higher so the taxes payment would also be higher right that is also one of the reason why Market is not behaving as per the expect so this again increases the tax burden on inv tax bur has increased Property Owners that's the reason many of the investors are saying these kind of reforms are the announcements by the by the government in case of the financial Market might basically deal a death to the financial Market next Income Tax Act of 1961 will be reviewed now it was expected the earlier government when we had UPA government they had proposed direct taxes code yeah they wanted to change the whole structure of direct taxes as well as indirect taxes they proposed GST we implemented that yeah the direct taxes code was actually shelled by the current government now they basically saying we want to review the it Act of 1961 so that it will be simplified it will be made much more comprehensive people can understand it and the disputes can also come down next income tax on foreign companies will be reduced to 35 many of the Learners will be having a doubt regarding this because they will simply say Sir somewhere I heard and in fact they'll point out to me and say you only told income tax on the corporates is 22% in India or 25% including CES Ander charges but this announcement is slightly different if you are a company which has a subsidiary in India you're registered with the MCA Ministry of corporate Affairs then you will be taken as a permanent establishment in India you will have the option to pay corporate taxes at 25% including CES and search charges but imagine I'm a foreign company I have only one project to implement in India I will not become I'll not set up a subsidary in India I will set up a branch office in India right and this branch office will certain amount of income that income will be taxed at 35% instead of 40% right the argument which has been given by various experts is this will help us to attract foreign investments away from China okay right next one viat vishwas this has been announced earlier also viad vishwas has been announced round one round two this is viad vishwas 2024 to reduce the taxation disputes and finally your parents will be happy your mother will be happy you are right let's say you will also be happy with this the government has reduced the customs duty on the gold as well as silver silver as well until now it was 15% and please remember that 15% is broken down into two components basic customs duty of 10% and 5% agriculture infrastructure development says the government would reduce that 10% to 6% now basic customs duty has been reduced to six which effectively means now the the gold prices are expected to come down assuming nothing else changes and you'll be able to purchase the gold at lower prices so no wonder the share prices of all the Jewelers the companies such asers Etc they basically went up after this announcement announ yeah done yeah yes sir so next uh we'll look at the next priority area which is inclusive human resource development and social justice now in this segment there were some very interesting announcements but it was widely expected as well when a coalition government was formed sir we were all expecting uh that nitish Kumar would have certain demands Chandra Babu Naidu would have certain demands because this NDA government was entirely dependent on the Coalition Partners uh their primary demand was for special category status but categorically the Modi government had refused to Grant special category status so it was very uh interesting for us to watch as to what would be the reward for these coalition partners and now it has become very evident in the budget uh the government has announced a new initiative focused on Eastern India the Pura initiative in fact that is a clever way of hiding uh the Electoral dividend which is being paid to the Coalition partners and also I think it's a great political move as well because along with rewarding Bihar and Andra Pradesh in a way it extends to odisa West Bengal and jant which are key electoral focuses Focus areas for the BJP in a way BJP has been desperate to make inroads in West Bengal so a scheme like this they already made inroads into odisha in odisa exactly it's a way of rewarding the voters as well and maybe it sends signal to other states like Tamil Nadu which has not voted for let's say BJP that you vote for us you get rewarded eventually so that way electorally politically I think it's a great move right but obviously any budget is driven by political electoral calculations so Bihar and Andra Pradesh they have quite literally got a bonanza in this budget uh some very important infrastructure schemes have been announced uh for example if you look at the dedicated fright Corridor the Eastern dedicated fright Corridor which links Amritsar to Kolkata a new industrial node at GAA has been proposed which will become a major industrial uh industrial cluster and this also has a cultural Dimension because under the tourism initiatives a lot of cultural oriented initiatives have been proposed to revive the temples and the pilgrimage sites which could revive the tourism as well thus boost the economy of Bihar so along with improved connectivity improved industrial activity it'll also drive more tourism as well next with regard to Road connectivity some Mega Expressway projects have been announced and under the tourism initiative places like bodgaya rajar Vali which are very significant in Hinduism in Buddhism even for James rajar is very significant in all the three faiths so the Revival of the tourist infrastructure has been proposed and this is again is going to be uh very very beneficial for Bihar along with that some new bridges over the ganga River Power projects which will solve the electricity problem the deficit which the region experiences along with new airports and several other infrastructure projects so Bihar has clearly got its uh share of the pie and if you look at uh the disaster management initiatives announced there is specific focus on flood assistance to Bihar because especially so you might know the Ki River it's called the sorrow of Bihar M frequently floods and causes enormous destruction so under the aibp program The Accelerated irrigation benefit program interlinking of River Project the Ki Mai link has been approved and separate flood assistance is being provided to Bihar to contain and mitigate the disaster related consequences but to be fair to the government flood assistance has been given to other uh disaster prone States as well like Assam utarak then sikim Himachal Pradesh so all of them are receiving flood mitigation funds uh which is indeed a very big step given that we are experiencing more extreme weather events which is primarily driven by climate change yeah so I think these are some uh very noteworthy initiatives and what really caught my attention was the initiatives related to tourism in the same Eastern uh region of India most of them are focused on few Hindu piligrimage sites Buddhist pilgrimage sites uh there is a project to revive the nalanda which is a long standing project and this has foreign policy Dimensions as well because uh under India's foreign polic policy we have the Buddhist circuit initiative where we promote our Buddhist Heritage and try to attract tourists from other Asian countries where Buddhism is a popular religion like from Japan to South Korea to Sri Lanka to China and improved infrastructure at these Temple complexes uh and especially rajar this will definitely drive up tourism both domestic and international tourism fetching lot of revenue for Bihar and Odessa is also a beneficiary on the cultural and tourism front then coming to Andhra Pradesh Andra Pradesh has also before you go to Andra Pradesh yes sir do you think government of India is doing sufficient to boost tourism in India because that is one area where we can save lot of outflow Forex res of and not only that attract lot of infl let's say doll as well I'm an economist so I'll talk in terms of dollars so U do you think government of India has has been doing sufficient or has done sufficient in the current budget uh in the current budget definitely the focus on tourism is very evident uh and also sir in the last 10 years if you look at the Modi government there has been lot of focus on promoting tourism yeah be it attracting foreign tourists or even boosting domestic tourism PM Modi himself has personally led the initiative from visiting lakad to setting up all the temple corridors so there's a lot of focus on that and we are working with Nepal Sri Lanka as well to revive the piligrimage routs uh the ramayana route for example and uh we have invested in certain projects abroad as well to Interlink our pilgrimage routes so there has been sufficient focus and I think that you can see that in this year's budget as well okay yeah and coming to Andra Pradesh so one big demand of the TDP Mr Chandrababu Naidu was to ensure that the commitments made under the reorganization ACT is fulfilled because ever since Andra Pradesh was bifurcated Andra Pradesh has been at the receiving end uh it has lost out of the revenue it has lost out on its administrative capabilities as well so Chandra Babu Naidu was demanding for special category status but that has been refused as we discussed but it uh the Modi government has made up for this by announcing 15,000 crores for amarati now this was a dream project for Chandra Babu Naidu so this is a big fulfillment of the demand of uh the TDP then the poam irrigation project again a major political issue for both Andra Pradesh and Telangana uh it helps in pleasing the vote base of the TDP as well and also it's very crucial with regard to agriculture in this belt in fact I remember Finance Minister specifically saying pointing out and saying this will help us achieve food security security exactly so that way it's a a project focused on uh National interest as well plus uh the political interests of the parties next with regard to Industrial Development there were some interesting announcements there are some major corridors coming up Sir like Hyderabad bangaluru Corridor vishakapatnam Chennai Corridor on these industrial corridors new nodes are being set up in Andra Pradesh Orval node karti node so this will lead to large scale Industrial Development it can boost manufacturing and also let's not forget Andra Pradesh is a castal state it can always leverage the ports uh there there is attenion on Port development as well this can boost exports so this can be great news for Andra Pradesh plus several regions of Andra Pradesh have been recognized as backward regions be it the Rial SEMA belt the north Andra Coastal belt prakasam District they've all received special funds uh in order to ensure that the backwardness is addressed in these areas so overall it's a great budget for Bihar and Andra Pradesh then since we are talking about social justice one issue is tribal development tribal welfare so before you go to tribal development I just just want to ask you a question on behalf of the students so don't you think this kind of let's say the budget allocation that is done by the government don't you think it will solidify the argument of many of the other southern states that the central government has a step-motherly treatment to WS them right absolutely sir that concern has always been there that's why I think I told at the start as well that such uh prioritized allocation for few States on political grounds will definitely raise concerns for fiscal federalism many states already have a concern that they're not getting a fair share but again to be fair to the government as well just as a Counterpoint if you look at the net Devolution which has happened from the union taxes which has been collected to the states even though Bihar and up are right at the top Andra Pradesh has not really got such a high share it's share has been comparable with Karnataka and others yeah so and again we should keep in mind the political considerations governments will be driven by it that's the reality so in that regard I think it's still fair enough okay yeah and coming to tribal welfare the pradan mry janjaa unat gram Aban the Modi government has been prioritizing tribal welfare over the last few years uh in fact PM Modi personally launched the janjaa div celebration yeah as well so there is great focus on the tribal Villages the aspect ational districts and also this is like hitting two birds with one stone this will help in tribal development sir at the same time the these areas are knle infested areas where they exploit the tribal issues and they try to build a narrative against the state they build their propaganda so this will help in countering nle propaganda to counter leftwing extremism then coming to women women are a priority Focus area in this year's budget yeah as you mentioned sir along with the poor the youth and uh the farmers women have been recognized as a as one of the important casts and special schemes have been launched to ensure the welfare of women and the girl child amounting to 3 lakh CR rupees and more importantly I would like to point out the focus on women employment because this has been a concern sir I think you will know better uh female labor force participation rate has been relatively lower yeah uh I think economic survey say around 37 37% and globally it is around 54% 4% so there's a considerable Gap so to boost the employment of women to create more opportunities for women lot of initiatives have been launched the government is trying to work with the private sector to create crash facilities for working mothers and also to create uh women hosts to ensure women safety and encourage more women to go out and work so I think these are great initiatives focused on women empowerment and as you pointed out sir for northeast region Financial inclusion is a priority area yes and I think apart from India post there is no other bank or institution which can really have that kind of reach that last mile connectivity so India post will be opening 100 branches in the Northeast so this is a very big development as far as Financial inclusion is concerned in the Northeast imagine the number of accounts bank accounts that will be opened uh the economic benefits that will arise out of that yeah plus just to add to your point the the banks are a very important source of capital formation right uh very recently if you have followed the news cycle Reserve Bank of India's Governor raised a concern regarding slow mobilization rate that is the deposit mobilization rate the banks are giving more loans the growth rate in the loans is greater than the deposit collection rate collection rate yeah this again not a not the primary objective but to a certain extent it will help us in mobilization of the deposits right and that will also add to Capital formation if if you're saving sufficient amount of money the Investments can be done in the same region demand can be promoted etc etc so that is the importance of this kind of announcement of the government right so this can be channeled into Investments as well yes right yeah so this was about you were discussing couple of more huh the previous one uh it was the same point this one it's related to same Andra Pradesh the same points it's already covered okay let me take up the industry as well as msme announcements lot of announcements but not all of them are relevant for civil services first one the MSM sector Finance Minister has categorically identified the importance of msmes she says msmes are very much part and parcel of and the backbone of Indian economy they contribute in terms of GDP employment generation they contribute in terms of let's say exports Etc and in the recent times especially post pandemic during as well as the post pandemic despite so many reforms being implemented by the government even today MSM is face a lot of issues especially let's say when there's a stress when they do not have sufficient payment when they do not have sufficient sales to be done either in the domestic Market or in the global market lot of stress is created in order to address those issue points or let's say the pain points first announcement done by the government is there is a initiative of the government or the scheme of the government pranant mudra yena micro units development and refinancing agency and under that there are three categories of loans which are provided shishu Kish and tarun the highest value of the loan is tarun category maximum was 10 lakh Rupees now government says if you are making the payment promptly that's a key term if you're making the payment promptly if you're repaying the loans correctly I will double the limit to you liit now you can borrow up to 20 lakh rupees so so it's a good time to borrow and start a definitely Med Enterprise so basically the MSM is will be happy with this reason being the beauty of the mudra yoga is you will get the loan without providing any collateral collateral without providing any security you'll be able to get the loan and the tun category has been increased to doubled to 20 lakh rupees second there is a platform called as a Treads platform set up by the Reserve Bank of India lot of times what happens sir if I'm a microenterprise if I've sold something to let's say a company if the company promises is to pay let's say in 45 days within 15 days I would require money in that case I cannot approach the company and ask the money to be paid because they have agreed to pay at 45 days in such cases there is a platform which has been set up by Reserve Bank of India I can right be a part of I can be registered on the TRS the buyer will be registered on the TRS I will sell my bills receivable to a financier I'll be able to get the finances that is a Treads platform until now the company's turnover if it was 500 CR they were supposed to be on the Treads platform Finance Minister has cut it into half 250 CR all of these will have to be present on the threats in fact the central public sector Enterprises more than 20 cpss now will have to be listed in the trads platform which essentially means lot of msmes again will be benefited by this third 50 food irradiation units in the msme financial assistance will be provided food irradiation basically means using radiation to kill the gems to kill the microorganisms which can cause let's say diseases when we consume them so 50 or it can even reduce the shelf life of perishable products even the organisms which are present they will reduce the shelf life which is basically and which will make sure that the food will spoil very fast correct sir so this this will improve the logistics on the back end of the supply CH it will definitely add to the shelf life we can transport it in a much better way store it in a better way so 50 irradiation units in msmes will be set up government will provide the financing assistance for this credit guarantee scheme for msmes in manufacturing sector essentially it means if I want to take a loan many of the times the banks are afraid of giving a loan to me reason being I may not have sufficient asset to backup MH sell and sell basically repay the loan the loans for such type of msmes government says don't worry there will be a credit guarantee scheme this will be Pro this will ensure that you'll be able to get more access to Credit Now this will be right promoting access to credit for the msmes next whenever the msmes are under stress for example in recent times if there is uh let's say if there is some issue in the European market let's say inflation msmes in India would be concerned right reason being we export a lot of goods and services to the USA Market European market Etc so when there's a stress in the msme where should they go right for examp for example when the Red Sea Crisis began msme sector was worried because that is one of the very important routes which are taken to export from the msmes to rest of the world correct so when they are in the stress period the government now says government will provide the funding and there will be a support mechanism that would be provided and lastly in integrated technology platform for insolvency and bankruptcy code again and again even when I've discussed the Hindu news analysis or even when sir has discussed the analysis part we would have discussed one area that is insolvency and bankruptcy code it has been implemented for more than 7 years now but even today there are certain problems or the cracks in the insolvent and bankruptcy system government says one we will set up a technology platform to ensure all the Stak holders are brought on to the same platform second the government also says there are certain issues under the IBC the the cases which have been resolved so far we have been able to clear more than a lakh CR worth of the credit which was stuck up in the system but even after that the number of days which are taken for resolution is much much higher right according to the law we are supposed to finish it in within 330 days in many of the cases it takes more than 2 years more than 3 years even the recovery is not very great recovery is somewhere around 30% but again I will take that number with a pinch of salt 30% compared to other systems is much much better right right so there are certain issues government says we will address these issues we will have a review of the insolvent and bankruptcy Cod so sir will this benefit any employers uh with regard to standing insolvency proceeding sir in in case of let's say IBC there is a technical term called as priority waterfall essentially it means once the compan is let's say either liquidated or sold to somebody else once the money is recovered who will get the first part of the P employees are much lower government will be at the top the government itself so government will take away whatever their charges are outstanding and after that slowly and steadily the creditors and then employees then everybody else will come right sir so the next priority area is energy security uh sir I personally felt the announcements made in energy sector is honestly outstanding uh it is really farsighted it is really putting India on the right path with regard to being a developed country by 2047 I have a doubt regarding this then you say these announcements were very good but don't you think on one side government of India says we want to become Net Zero by 2070 correct sir we want to have net zero emissions in Railways by 2030 but at the same point of time government is also promoting thermal energy right sir that's a very good point if you see here the government has announced the promotion of these uh Ultra super thermal power plants right so the point you're making is at the same time the government is focusing on thermal power projects which consume coal which contribute to fossil fuel emissions but sir I have a counter point if you look at the overall budget and if you look at the energy security plans of India there is a increasing allocation for the nuclear sector right in the not in the nuclear civilian domain not just the the large nuclear reactors but there is a special priority given to small and modular nuclear reactors yeah so a special scheme is being launched to promote more research and development uh with regard to the Barat small nuclear reactors and the best part is the private sector is being roped in in a very big way into the nuclear domain which is a clean energy yeah right so in a way that balances it out and also please understand that these thermal power plants right they're much more efficient than a a traditional thermal power plant uh according to data sir these Thal power plants have a greater efficiency up to almost 46% which means the emissions are lower and it can reduce the import of coal as well uh and of course India is balancing it out we have never said that we will phase out coal we are phasing it down we we will reduce it so if we achieve Net Zero by let's say 2070 even then we will continue relying on fossil fuels because India has every right to do that uh we still have the carbon space left in the carbon budget uh because developed countries they have largely consumed the carbon budget they have historical responsibilities on them so as a developing nation and with a country with one of the lowest per capita emissions we still have every right to continue burning fossil fuels to ensure we meet our developmental targets so I think it's a very balanced uh budget in that regard where we are focusing on clean energy be it solar wind uh nuclear energy small nuclear reactors Etc at the same time we are focusing on more efficient forms of th thermal power we're trying to bring down the emissions but our dependency on coal fossil fuels will continue in fact I'll just add a point uh regarding whatever you have said which you told me when we were basically having a discussion you basically told me that in case of renewable energy there's a problem of not being able to generate throughout the day correct right it is intermittent yeah so that's a reason uh no doubt government will keep on promoting renewable energy but even after that until unless we have let's say storage solutions to the extent of meeting the demand especially during daytime or even during the night time our dependence on the fossil fuels will continue will continue and sir I think that is where pumped storage policy comes into picture in that way government has addressed this issue as well as you rightly pointed out solar wind Etc these clean renewable forms of energy they are not very consistent during cloud cover or during adverse weather conditions or during night time you can't really rely right now right now there is Monson exactly so it's not very reliable so I think this is where storage of the electricity generated through clean forms becomes very critical and that is where Battery Technology comes into picture so the government is coming out with a pumped storage policy to ensure that we have enough options to store that clean electricity and use it at a later Point ensure that there is consistent Supply okay and to achieve self-sufficiency with regard to batteries and sir I'm sure you know that critical minerals strategic minerals are absolutely vital be it lithium Cobalt nickel copper and and all the Rare Earth elements as well so in that there is a big announcement uh with regard to taxation uh Finance Minister announced that there is a exemption for 25 critical minerals and uh custom duties for other critical minerals also is being brought down so this will make it easier for India to secure those resources from abroad and more importantly the Finance Minister has announced a critical minerals Mission this will really help India to ensure that we secure these critical resources because in various Industries Electronics defense Aerospace and uh and consumer Industries these minerals are absolutely critical and India unfortunately has a very limited uh resource with in that regard so through this Mission the government is focusing on all the three priority areas which is to increase domestic production recently in Jammu and Kashmir we have found a major lithium Reserve we would like to tap into those reserves and any other small reserves we have discovered at the same time there is priority being given for recycling of critical minerals this will create a circular economy it will ensure the economy becomes more efficient if we can recycle the critical minerals and more importantly overseas acquisition we have even set up a public sector entity called kabil yeah to secure foreign mines from U African countries to Australia to the lithium triangle countries in South America so in that regard I think it's a great initiative plus offshore mining mineral policy also has been announced but sir uh let me put you in a you know in a spot now and I I'm pretty sure most of the viewers will also criticize me for that right one of the very important countries in terms of let's say mining critical minerals is China right so in that particular regards which I know I'll be criticized now in that particular regards don't you think it is in India's interest to have a very good relations with China because I distinctly remember last year China announced that because there is scarce availability lesser availability of critical minerals in the domestic Market they imposed restriction on export of some of them them right and in fact one of the expert argued that it is like if China catches cold then India will start sneezing now right right so in that particular context do you think it is better for India to have very good friendly relations to with China so that the import of minerals will continue right sir one would wish to have good relations with all their neighbors India has always been a peac loving country we would seek out friendly relations but the ground reality is that China is a inherently aggressive power China is inherently uh an expansionist power so in that regard it wouldn't be right for India to secure friendly ties with China just for the sake of sourcing critical minerals because there are other Alternatives uh for example we have become part of the mineral security partnership led by the United States and Australia is a very reliable partner it has major resources of critical minerals there are African countries which can supply India with critical minerals and Latin American countries as well so there are alternative Supply chains available for us and given the standing border dispute and in general China's aggression and also sir China knows how to leverage its economic Advantage for geopolitical gains in fact upsc had asked a Main's question on this how does China leverage its economic advantage and turn that into a geopolitical strategic Advantage so it would never be advisable to be reliable to be reliant on Chinese supplies we in fact not just India most countries even us European countries they're already struggling because of their China dependency there is a import dependency so everyone is trying to become a little self-reliant create uh alter interet Supply chains so I think India is on the right path in that regard okay then coming back to energy sector sir there were few other announcements minor announcements uh there were there was a initiative with regard to the hard to Abate sectors these are sectors where it is very hard to reduce the emissions like for example steel sector no matter what you do No Matter What technological changes you do it's very hard to bring down the emissions and we have to continue the steel production so here carbon Market is being created with specific targets M so that at least the emission overall emissions from that industry from specific hard to Abate Industries can be brought down and the government is incentivizing this so I think in fact these kind of announcements will become very important if you look at let's say the European countries which are trying to impose tariffs on the emissions of these industries the carbon border adjustment mechanism which India is opposing by the way yeah absolutely and also uh with regard to msme sector uh the government is proposing an energy audit to drive Energy Efficiency in the msme industry as well because sir as you told msme industry is absolutely critical for our exports for our GDP for employment generation because it is a labor intensive sector so making it energy efficient is also a priority plus under the suryya gar mu B Yoga which was announced during the in budget yes there have been uh 1.28 CR registrations which I think is quite phenomenal in fact the target was 1 CR one CR and the government says at least as the the government claims to have overshot the Target and U so this is great for adoption of solar energy yes uh to install rooftop solar panels and integrate that with the power grids yeah so that's about energy security I think now we can talk about employment employment as well as Skilling uh one of the very important Focus areas of the Union government budget this year lot of announcements let's look at some of them first one is there is a initiative which has been taken by the government by the name of employment linked incentive just on lines of PL where the government has given certain targets or parameters if you meet them government will provide incentives sir if I'm not wrong you actually predicted this yesterday in the expectation in the budget expectation video that we uploaded yesterday one very important Focus area that I felt government should Implement reforms was the jobs and the reason was very simple sir if you have seen forget about other newspapers if you look at only Hindu newspaper in the last let's say one month there have been Ting times where there's a discussion regarding employment as well as unemployment right just to quote certain examples couple of days ago there was one article regarding female unemployment rate as a editorial MH before that there was in the beginning of the month itself this month of July there was one more article regarding overall unemployment situation in India how make in India can or Manufacturing in India can address it there was a report by the city group which talked about the issue of unemployment in India there was another report by Reserve Bank of India kls report which countered the argument of unemployment and said we have created sufficient number of jobs so it was just a matter of time when government of India would start making certain announcements and again this is not nothing new if you look at what has happened to go let's say the uh elections loab election results this was very much predictable predictable yeah so government has announced an initiative Eli employment linked incentive under which there are three schemes scheme a b and c in the scheme a one month wage if you are a salaried person of up to 1 lakh rupees one month wage in three installments up to 15,000 rupees up to 15,000 do not misunderstand it to say that 1 lakh rupe will be given up to 15,000 rupees that three installment would be given to you this is expected to benefit 210 lakh youth in India second one is a scheme B job creation in manufacturing sector this is provided to firsttime employees employees that is the people who will get the job for the first time and here whatever is your epfo contribution once you become an employee you'll have to contribute right to an organization called as epfo that is compulsory so epfo contribution the incentive to both employee as well as Employer for EPF of contribution would be provided for the first four years for the first four years and this is expected to benefit around 30 lakh youth in India and the third scheme that is a scheme C this will basically provide epfo contribution reimbursements to employees of the employees and that will be limited to 3,000 rupees per month for 2year duration so these are basically the three schemes which are expected to be implemented under employment linked incentive sir do you think is it the right way to create employment by incentivizing the employer or shouldn't the government focus on genuinely creating job opportunities sir the issue in case of India has been that earlier also government of India has implemented multiple schemes but the problem has been that because of multiple let's say uh situations such as external parameters internal internal factors that has led to lot of loss of the jobs and again I will not blame it only on the external and internal factors even to a certain extent some of the laws of government of India has incentivize the companies to hire lesser number of people okay the stringent labor laws laws right where there are more than more than 100 labor laws put together the central as well as the state government even for that matter if you take the current discussion that is happening surrounding let's say Karnataka if you look at the provisions of the Karnataka gig employee law mhm it is not in favor of some of the stakeholders after that also there was one more proposal that was put forward by K government regarding one more law where they wanted to employ for 14 hours a day 14 hours a day which has been correctly criticized by everybody in the market so argument is there are certain issues as a result of which there has been a problem in terms of demand side that is generation of jobs so government has not only taken a measure to create jobs in the market it also is ensuring that sufficient Skilling would be provided couple of more schemes are there regarding Skilling itself so these are the three schemes what about the other initiatives the other initiatives are 20 lakh youth will be skilled for a period of more than 5e duration and the beauty of the initiatives that the government is taking now unlike earlier system where I would simply train a youth and expect the youth to get a job in the market right and the the problem Central problem of that initiative was the industries wanted a different skill set the youth would be having a different skill set in fact sir I would like to add something here very interesting anecdote recently there was this alumni meet in my former College I was talking to the dean the principal and they were pointing out this Gap uh the Gap in the skills what industry leaders expect and what the graduates actually have there's a huge gap in the required skills yes so do you think this will be addressed very very pertinent question in fact if you look at the initiative by the name of Pradhan uh vikas yoga Calas the third iteration PM K kvy 3.0 which was launched in very very recently by the government post pandemic they decided that rather than Skilling a person and expecting the person to get a job first I will conduct a survey District wise right every District we set up a skill coun they would survey the district find out what kind of skill sets are needed and then provide that in the form of training which essentially means the demand of the industry as well as the skill sets which are there with the youth are one and the same and that would automatically ensure that the youth who are skilled would be getting the job in fact here also if you look at the last announcement in the slide the Finance Minister clearly stated that the course content as well as the design will be aligned as per the skill requirements of the industries we will first assess what is the requirement then we will provide the Skilling sir here I would like to widen this argument When government says Skilling vocational training usually I'm assuming it is always something related to let's say Plumbing skills carpentry skills some handicraft skills this always creates employment which is of a lower value yeah shouldn't the government really focus on education more instead of spending so much money just on Skilling why not focus more on education ensure that you have a stronger education system meet the goals of NEP ensure you get more well-trained youth who don't require Skilling in the first place ensure they get high paying jobs and more skilled jobs instead of the low skilled jobs the government is pushing for in fact that was one of the important areas of new education policy the training vocational training but to what extent that has to be implemented what change changes that we need to implement in our own education system that will take certain time but so far the government has changed its policy rather than basically having a supply driven model for a labor they have shifted to a concept of a demand driven labor model and this in fact was asked in upsc it is better to have a demand driven labor model rather than having a supply exactly and not just this in fact government of India has announced one more initiative that is a scheme five in the prime minister's program the first three this is the fourth and the fifth one where the Finance Minister says we will ensure that in the next 5 year 1 CR people will be working as apprentices in top 500 companies in India the argument of the government is if you work as an apprentice for one year as a trainee in these large companies you will know what kind of skill sets they are expecting and in the process they they will also provide training to you now many of the companies would simply say Sir where do we have the money to provide the Skilling the Finance Minister says you have a corporate social responsibility fund fund out of the CSR use the funds to provide the training to the people and regarding stipend I will take care of it onetime assistance of 6,000 rupees I will pay for it but the training expenditure has to be taken up by the respective companies out of their CSR funds right and this also is a very important initiative reason being we have completed 10 years of CSR implementation now right the CSR was actually implemented back in the 2013 with the new companies act where in 2024 10 years 10 years yeah and that's a precise reason a question was asked on CSR in the preliminary examination exam yeah so let's go to the next one now yeah so now we are moving to the next priority area which is Urban Development I'm sure all of you know India faces a enormous challenge with regard to urbanization yes with we largely have unplanned cities uh probably apart from chandigar to an extent every other city is in India is largely unplanned we are witnessing a major population explosion there are multiple governance issues which have propped up from transportation to the traffic problems the air pollution in fact the World Bank also says the same thing in the report there will be a huge population growth in the urban cities exactly and also the rural urban migration which scaled in the '90s and early 2000 in a way has continued uh even in the last two decades as well as people find more opportunities in urban areas so Urban population is rising but your city infrastructure is not improved uh it is not able to handle the increased load and this has led to several problems and challenges so that is why the central government has given atmost priority for Urban Development the budget says that the government will look at cities as growth hubs and the focus will be on transit connectivity the Focus will be on basic Urban services to improve the quality of life from Waste Management to clean water sea wed management and uh ensuring that the environment in general in cities is made cleaner yeah this is a major environmental problem it affects the standard of living and in many ways it affects the economy as well yes so there are few priority initiatives the government has announced in this regard and more importantly there is focus on developing the per urban areas or what we call as uh the satellite towns that exist in the outskirts so they will be a focus uh especially if you look at bangaluru Hyderabad uh these cities have a lot of potential to expand even further to create mini satellite towns on the outskirts and allow them to flourish as as a city in itself so there is priority for uh the development of per urban areas there is focused on improving the infrastructure in our existing cities focus on Brownfield development projects instead of focusing just on the new projects existing projects can be upgraded create better facilities maybe better Parks or better roads better Pavements so that becomes a priority right now and also for Transit oriented development 14 large cities with a population of more than 3 million they have been chosen for these Transit oriented development projects where the focus will be on creating multi modes of Transport from buses to rail and essentially to bring down the cost of Transportation as well because Urban mobility in it is a big challenge yeah plus in urban areas housing is a massive problem so that issue is being addressed through pradan mry AAS yogena the second edition of it where the government is focusing on 1 CR Urban poor households because in most cities we are seeing the rapid expansion of slums uh this creates multiple socioeconomic problems of its own from poor education to poor nutrition standards to spread of diseases and to tackle them housing is one of the Solutions and also the government has been promoting Street vendors uh we had schemes like PM Swan yes so in a continuation of that the government is organizing 100 weekly Hearts that's the plan uh to organize these street food hubs so I think this is great for food lovers as well or maybe they might go out and eat more junk food but either ways it will benefit the street vendors whether healthy or not it'll benefit the economy and also uh we all know how problematic it is to rent house in our cities look at the rents in Mumbai in bangaluru it's it has become unaffordable so the government is looking to bring more transparency here with regard to rental policies and uh also it is trying to create more affordable rental housing for the industrial workers especially most of them would be migrant workers they they'll all be staying in rented houses so it's very crucial to make rent affordable for the migrant industrial workers so I think these are some very good initiatives the focus is absolutely right focused on welfare of the urban areas so now over to you sir agriculture sector one of the very important Focus areas like I said the first part of the announcements in the budget after giving a overview the first area of focus was agriculture sector itself so Finance Minister says there is availability of digital public infrastructure we will use the DPI to improve let's say certain facilities that we provide to Farmers for example we will digitalize certain records of the farmers we will use a II to promotee lot of services second one we want to promote agriculture research and development in fact yesterday also I told you and again I'll reiterate it according to a report that was published by ier a Premier Research a agency in India if you spend one rupe on research and development in agriculture sector research and development mind you the returns or the yield will be more than 11 rupe compared to that you spend on fertilizer Ro power Etc the returns or the yield is less than 1% so obviously there is a huge importance to research and development that's a reason the Finance Minister says I will be introducing that the government will be introducing climate res res um sorry climate resilient crops crops we need to increase the production we need to increase the productivity and with whatever is happening regarding the climate change we need to have a climate resoltion because with more extreme weather DRS heat waves and forest fires fls best example the recent ELO impact which had a huge impact on the overall agriculture production in India that in a agricultural economy primary agrarian economy like India I think it's so one climate resilient varieties will be introduced and second right will be 1 CR farmers will be initiated into natural farming which is good for not only the soil good for the farmers also dependency on the Imports will keep on coming down etc etc right so mission to achieve self-sufficiency very important self-sufficiency why please understand this India despite being an agrarian economy we produce a lot of pulses we produce a lot of oil States but even then we are dependent on the Imports we import a lot of pulses into India we import a lot of right let's say the oil seeds into India edible oils into India and and that increases the vulnerability if the exporting country bans them imposes sarch charge or let's say taxes on them we will have to bear the brunt of it or even sir as we saw the conflicts like Russia Ukraine are major producers of food grains and the War caused A disruption which increased the food prices caused inflation yes food insecurity right so that's a reason the government now says we will focus on achieving self-sufficiency in pulses as well as oil seeds clusters for vegetable production would be developed the whole argument is in recent times if you look at the inflation rate in India one of the drivers of inflation rate has been vegetables and that's the reason the government is now focused even on cluster based development of vegetables so that the procurement can be much more efficient the warehousing Transportation Etc can be much more efficient and Supply stable Supply will always mean good for you as well as in terms of market prices or is the government worried about the Electoral outcome because usually onion prices and essential vegetable prices have toppled governments that generally happens sir it's not just that the recent elections has happened that way I distinctly remember one incidents where a Delhi government the Delhi government or the sitting chief minister lost only because of onion prices exactly yeah so the idea of let's say the vegetable prices or let's say the uh e prices having an impact on electoral outcomes is nothing new because that has been historically been accurate reason being all of us whether you reside in urban India or rural India all of us spend a lot of money on consuming food but specifically when the prices of vegetables pulses or for that matter onion tomato goes up they will hurt very badly the poor person correct and also sir pulses are a source of protein protein yes so basically the rise in the market prices of this will hurt the Common Man much more compared to let's say the poor class uh person much more compared to a middle class or an upper class absolutely that's a reason the government is taking so many measures in order to address the food inflation in the domestic Market next infrastructure infrastructure regarding infrastructure please understand infrastructure investment has kept on increasing over a period of time nothing new in that if you look at the announcements of the governments let's say Last 5 Years how much is the total expenditure done by the government to develop infrastructure keeps on increasing reason being capital expenditure has a multiplier effect multiplier effect essentially means if you spend one rupe on infrastructure how much my GDP will increase by by how many Rupees the GDP will increase that is capital the multiplier effect so historically capital expenditure or the capex multiplier effect has been very high so in many ways it's not an expenditure it's an investment yes along longterm investment yes the investment on development of infrastructure investment to basically ensure that the demands in the future the demands of the future such as let's say roads or warehouses ports for that matter for example India wants to ensure ensure that by 2030 we will have exports to the tune of $2 trillion so to achieve all of it you require infrastructure so capital expenditure has been increased to 11 lakh 11,000 111 CR rupees and this is not just all of it please understand this in addition to central government spending more than 11 lakh CR central government back in the year 20 and 21 this was the prime of the pandemic during that particular period of time government to in order to increase the capital expenditure of the states announced an initiative a 50-year loan would be provided for capital expenditure purposes provided they meet certain conditions but it was interest free that initially was 1 lakh CR was increased and in this year's budget it has been further increased to 1.5 lakh CR rupees so essentially if you put together if you put together overall expenditure capital expenditure which will be done by the center allocation to the states Etc the overall capital expenditure will go to the tune of 15 lakh CR rupees 15 lakh that's not a small amount yeah compared to last year you will see there is at least around 20% Jump Around 20% jump in terms of capital expenditure sir what was the cap capex in the last budget as a percentage of GDP it was around 3.4% sir 3.3 to 3.4 remain the same it has remained the same but if you look at the overall expenditure and mind you all these are budget estimates and what is provided in the previous years is generally either revised expenditures or let's say the actual EXP it might so happen that instead of spending 15 lakh CR rupees we might end up spending even 16 lakh CR right we might end up spending 17 lakh CR as such Because the actual expenditure will vary compared to what was announced by the government because of let's say requirement of the economy it might so happen that the government will feel you need to have more capex they might increase the allocation so right now it is 15 lakh CR somewhere around 3.4% of the GDP number got it okay so apart from the capital expenditure pradhanmantri gr Sak yena was launched many decades ago it will provide all weather roads at least on paper all weather roads to our Villages so certain Villages which have been identified over 25,000 Villages which have met the criteria to be covered under pmgs gsy the fourth stage or the fourth phase of this will be implemented and the road connectivity will be provided to these villages aibp already have covered assistance to Assam as well as right the other state to manage the flood already covered by Chan sir right sir let's go to the next one sir next huh this is another priority area which again I think is very noteworthy as well this is innovation research and development the government has provided lot of priority for Innovation and R&D because the government plans to make India a developed country a vixit bat by 2047 and the only way you become developed is by focusing on Research development Innovation bringing out new technology securing more patents that's the only way a country can really grow technologically and even cap uh capture the global market so in this regard India has shown a lot of improvement we have our ranking on the global Innovation index has improved uh in the last few years our investments in R&D also has gone up considerably but still if you compare Sir with other developed industrial economies we are still falling short with regard our investments in R&D uh for example let's say you look at countries like China United States their investment in R&D is in the range of 3 to 5% of their GDP if you look at Japan and Israel this jumps up even further up to 6 7% of their GDP now I'm sure you would know what's the number with India India's overall investments in R&D is roughly around 6 to 7% maximum yeah around 64 65% so as a percentage of GDP what we are putting or what we are investing in R&D is very minimal but still the number of patents from our country has gone up of course our investments have slightly increased over the years but compared to our competitors we are way behind the curve and the primary problem with regard to our investments in R&D is that private sector India doesn't invest much if you look at the data just just to have uh now let's say some of the students might have this doubt right sir why is the R&D so important this is how you bring out new Innovations let's say we are focused on clean energy green transition we are focused on artificial intelligence cyber security and other critical emerging Technologies the only way we can capture these markets is by focusing on research and development or be it new vaccines new drugs or U new changes in agricultural technology so to grow in any sector technology is what is needed that's why they say technology is a great leveler it it creates a Level Playing Field between two unequal uh competitors so if India really has to get that jump start and and jump ahead of its competitors uh investments in R&D is going to be absolutely critical MH so as I was pointing out sir if you look at the ger the gross expenditure that we incur on R&D most of it is coming from public sector even though our total R&D Investments is very less as a percentage of GDP within that majority of Investments is coming from the government itself because the government has a number of scientific institutions uh R&D uh institutions from ISRO drdo many others csir so most Investments are coming from the government itself private Investments have been historically very low one amongst the lowest in the world if you look at China us private sector investment in R&D is in the range of 75 to 77% meaning their governments are investing hardly 23 25% but in India it's the opposite the private sector is investing hardly around 35% 36% in uh uh R&D remaining 65% almost is coming from the government itself so this is one reason why India is lagging behind and that is why the budget has some commendable initiatives for example the anusandhan national research fund uh the law this Act was passed last year uh the anusandhan national research fund act it's modeled on the similar fund which is there in the US as well right so this would increase funding for R&D U research and development in basic Sciences it'll encourage more researchers to get into the domain and incentivize them plus private sector will be pushed it'll be incentivized by the government to pull in more funds and resources into R&D in fact one of the reasons why private sector did not invest much was absence of incentives absence of incentives so the government is trying to pull around 1 lakh CR rupees and this is supposed to give a boost for the private sector as well to put more money into R&D so let's see how this uh works out but next what what is really uh interesting what caught my eye was the space economy uh sir as you know we have liberalized our space sector opened up to private uh investors uh even FDI liberalization has been done startups have come up and they're already making great advances in the space sector so India as you know is one of the cheapest space fairing nations in that regard uh we offer some of the most lowcost uh launches for foreign vendors right and India has great potential here so to tap into this the government has correctly identified the sector and it has set up a VC fund the government itself wants to become a VC investor bringing thousand crores of investment and the goal is to ensure that the space economy Grows by five times in the next decade so that's a very ambitious Target so I think India has great opportunities here to leverage uh both ISRO and the private startups which have come up the the private space companies I think they have a long way to go so it's a right encouragement in the right uh Direction yeah so coming to financials okay the last part of the budget discussion now financials what has been proposed by the government in terms of let's say deficits because obviously from one year to next year if you look at the budgets the government will spend more money compared to how much they are earning but to ensure that there is an intergenerational parity that is how much we spend today will not affect let's say the expenditures of the future governments the fbm says that we have to maintain fiscal deficit drag it down so government of India this year has targeted a fiscal deficit Target of 4.9% in fact please understand now initially when the inm budget was announced we had targeted this to 5.1% so that's a reason in the beginning of the discussion I said this is a budget which is focused on fiscal Prudence that is rather than spending left right and Center on those schemes this schemes right XYZ Etc government says no I will bring down the fiscal deficit and to a very great extent this number has been helped by the Reserve Bank of India as a surplus trans the dividends which have been so the Reserve Bank of India very recently which was surprising to most of the people in the market has transferred a surplus of more than 2 lakh CR rupees 2 lakh CR rupees that's the dividend you should take yes right so just to put things in perspective the overall budget size is around 42 lakh CR rupees and The Reserve Bank of India has transferred a surplus of more than 2 lakh CR rupees so instead of achieving 5.1% now government has dragged it down to 4.9% in fact the f BM document within the fbm document the macroeconomic framework statement says this is commendable because the economy has arisen now from back to back two Black Swan events right although those have not happened purely only in India but they had they had an impact on the global market including Indian market by the way so we have set up a target of 4.9% of fiscal deficit for The Current financial year which the government wants to drag it down to 4.4 5% in the next financial year that is for 25 and 26 also if you look at the trend sir yes if you look at the pandemic period the government was forced to increase spending even at the risk of crossing the FD targets fiscal deficit generally what happens is whenever these kinds of disruptions do take place and again it's out of the hands of the government of India if you remember the 2008 2009 financial crisis the crisis which not only had a huge impact on the US market also affected us right so back to back multi events either in the domestic Market or in the international market will have an impact and at that particular point of time there is no other option for the government to go for excess spending at the same point of time Reed collection would be lower that's a reason during pandemic the fiscal deficit shot up to more than 9% we wanted to drag it down to 3% it shot up to more than 9% but now government of India is on a fiscal consolidation path we have targeted 4.9 for The Current financial year and 4.5% for the next financial year and other targets you can have a look at it do not memorize these numbers Revenue deficit targeted is 1.8% the primary deficit is 1.4% and effective Revenue deficit 6% in addition to this if you look at what are the numbers what are the overall numbers right you will basically see that you'll basically see that the government would would be spending the money in this way and earning under these particular parameters for example the income tax collection Target is 19% 19% of the overall and again please understand nothing surprising here because generally more than 55 to 60% of the total income earned by the government comes in the form of taxes right tax is a major source of receipt for the government so income tax Union excise 5% GST 18 % corporate tax 177% and apart from this Customs 4% in fact in case of Customs also lot of changes have been done for different types of products you do not have to memorize them simply remember some of the important announcements such as for some of the cancer medicines the Customs has been waved off for gold Customs has been reduced for silver Customs has been reduced even for mobile phone components in fact the Finance Minister made a remark she stated that the mobile phone exports production and exports has increased in India the exports have increased by more than 100% And that's a reason I will reduce the customs duties which are applicable on some of the components so that more production will take place and we can even export at a lower cost now right sir okay so taxes these are the components in addition to this borrowings and other liabilities more than 1/4 of it non- tax receipts is 9% and non- debt Capital receipts is is just 1% in addition to this please have a look at where does the government actually spend money and as usual the important areas of expenditure for the government will be Central sector scheme the uh expenditure or let's say the transfers to the States because of the finance commission recommendation of fiscal Devolution or the tax Devolution the uh the share of taxes or let's say the grants which are recommended Again by the finance commission Central sponsored schemes and interest payment generally interest payment takes a chunk of the total exp always a considerable amount yes generally around 1/5th 20% 21% will vary from one year to next year but again it is on lines 19% of the total expenditure for interest payment so this is how government is going to earn money and spend money is it finalized will it always remain constant like this absolutely no because I hope all of you know these are estimates the government is estimating income taxes of 19% of the total income it might change over a period of time right corporate taxes of 177% it might be affected by many other parameters so these are the budget estimates so looking at subsidies here I was just reminded um does this budget have any popul schemes is there any wasteful expenditure happening uh again I would not be calling that as a wasteful expenditure but uh please understand there is a term that was used by the Prime Minister ravy culture so uh argument is populist schemes welfare schemes are required let's be very Frank with that there is a requirement of welfare schemes but the question is are these schemes targeted well are these schemes right provided in a right way ensuring that right beneficiaries will get the benefit for example the Finance Minister in the speech talked about e voucher system right right to the students the students who take a loan 3% interest would be provided in the form of a subvention interest subvention but the Finance Minister rightly said this assistance will be provided in the form of a e voucher system and the beauty of the E voucher system is it is person specific mhm only the right person who has got this access can use it only for the right purpose so there's no chance of leakage yes diversion of historically if you see imagine government wants to provide you 100 rupees and they want you to purchase food grains but what is the guarantee that you'll be using the 100 rupees for purchasing food grains if if I'm of that particular let's say orientation I would be using 100 rupees to purchase drinks yeah right so there is always a potential of abuse again I'm not promoting it but there have been leakages that have happened so government is basically talking about usage of echer system government is talking about providing subsidies for women right Etc Etc so again as far as I'm concerned government has not changed its path historically it has remained on the same path of providing required welfare schemes and if with introduction of direct benefit transfer we have been able to cut down the wasteful expenditure or the leakages in the system that is exactly what has been continued here as well so in addition to this if you have a look at the overall key numbers focus on the budget estimates for the 2024 and 2025 these are budget estimates the overall expenditure the overall expenditure is 48 lakh CR rupees 48 lakh CR rupes but the key number out of this would be the fiscal deficit I would focus on the fiscal deficit here the fiscal deficit is 16 lakh CR which essentially means government is targeting a borrowing of 16 lakh CR rupes this year and this if you compare it to last year compare it to last year this is revise estimate and compare it to the actuals of the Year 22 23 you will realize at least regarding the estimates you will realize that the government's borrowings have been controlled have been controlled again take it with a pinch of salt reason being you do not know how much will be the government actually borrowing in the coming days we'll get to know only when actual when the actual estimates will be provided 2 years after this budget you will come to know did the government end up borrowing only 16 lakh CR or they ended up borrowing more than 16 lakh CR so take it with a pinch of salt but at least right now you can be comfortable in the fact that or looking at the fact that yes government has targeted a lower borrowing compared to two previous Financial years so this is basically the overall view of the budget that has been presented by the Finance Minister for The Current financial year 24 and 25 sir would you want to provide concluding remarks now yes sir before that I would like to ask a couple of questions yes we were talking about welfare programs yes one of the most important welfare program has been manrega yeah uh since the days of the UPA especially given the financial crisis that occurred in 2008 2009 and the slump in the economy manrega was one welfare scheme which put money in the hands of the rural uh people it helped in sustaining the demand but in general we have seen a trend uh under the current uh dispensation where a consistently lower allocation has been provided or at least that is the criticism that manrega has been sidelined or a lower allocation has been provided so what do you think so what is your view on this sir uh there are different viewpoints regarding mandrea please understand that point number one having more allocation in the mandrea doesn't always indicate that there is a rural distress even this particular point was mentioned by economic survey the argument is generally generally the argument is if people are demanding more under manrega more number of days under manrega more people are joining manrega it simply means they are not able to get other jobs economic Services that's not the case that's not the situation so one Higher demand for mandrea doesn't always equal to higher distress it might have happened in certain times when let's say pandemic was there when people went back there was a reverse migration that was observed more people in villages no wage opportunity outside they would have demanded more but government itself says there is a complete economic recovery sufficient number of jobs are available in the market in fact government data itself says in the last four years we have created 8 CR jobs that is annually 2 CR jobs should we take that also with a pinch of so uh I would simply say go with the government data right because ultimately you will have to write what is the source of it and if you write this according to epfo this is a data according to RBI this is a data please go with that even government of India has given a same statement last week by the labor department they said don't worry about the private sector data because the way they meth the way they calculate it may not be a standard the sample size may not be appropriate so argument is simple higher manrega doesn't higher demand for manrega doesn't equal to higher distress second it's a fallacy saying that allocation to mandrea has been reduced generally for example last Financial year also when the budget estimates were provided allocations were lesser but by the time the financial Year got over again even though we we have we have finished the financial year now the amount of allocations were revised upwards to 86,000 cror so same amount of allocation has been done for the current Financial fin it might be revised upwards by the end of the financial year and also to remember manrega is again seen as a wasteful scheme there is a very valid criticism as well that manrega has often led to wasteful work there are no long-term assets created uh and there is even a joke that uh just for digging up the soil people are getting paid they just shift the soil from here to there and get paid for that so in that regard I think it has not really contributed to long-term asset creation there is an argument yeah uh But please understand the target of manrega is rural population the kind of assets which are needed in the rural part of India that would be the focus area yes there was a criticism because there was a leakage also there was found to be a leakage regarding fake job cards yes right so that I'm pretty sure government has already addressed it and with that I don't think so there is any requirement of let's say uh criticizing the mandrea as long as the government says it is working right it if at all you find a criticism to balance the Viewpoint write the criticism as well right sir thank you so much much I have just one last doubt yes I was watching some videos of other Educators or institutes many of them were saying that budget analysis economic survey analysis is not needed it's pretty useless for the exam uh they say because we had a recent budget inter budget and again before next year prelims there would be one more full-fledged budget which will be submitted yeah so the argument is of of some Educators is that you don't watch these videos now it's a waste of time watch it later what do you think s how how do you think the analysis will be helpful because I just want to ensure the aspirants know like what questions to anticipate will the discussion really help in some way or the other okay so generally understand this when the budget is presented in a normal year we do it in the month of February right sir and before the budget is presented the economic survey is provided one best use that you people can make of these documents is memorize a certain important data memorize certain important data and you can use that data write it in the Mains examination and quote it as saying this is from economic survey year so and so this is from the budget document year so and so so definitely yes if you ask me you'll have to use government data to fetch very good number of marks in the mains examination second because the budget has been announced so very nearer to the mains examination now you cannot simply say the budget announcements are useless don't read it there have been instances in the past where where the budget which was announced in the month of February questions have been asked in the mains examination right sir for example the question was mainly based on the changes in the Taxation and currently again the government of India has announced certain changes in the C capital gains tax or for that matter upsc question Setter might look at the concept of Angel tax finally there's a closure under the angel tax upsc question paper the person who's preparing might pick up the concept of Angel tax and ask a question based on in fact there are so many important Concepts schemes which can be very important for the exam yes right so uh I would simply say do not ignore the budget documents as well as the economic survey documents especially if you are writing the mains examination in the uh month of September 2024 so thank you sham sir for such a detailed analysis so on a concluding note as they say the taste lies in eating the pudding so the budget this is just a plan the government has laid out we have analyzed it but the actual outcome we know only when it is implemented yes whether the announcements whether the proposals will come through so I hope you guys like the discussion and if you did benefit from the session do let us know through your comments do let us know what you think about the budget that has been presented and don't forget to support us with your likes that is what keeps us motivated and do subscribe to our channel that is it for today thanks for watching have a good night good night