Budget 2024 Analysis

Public Reaction

• Negative public reaction to Budget 2024, presented by Finance Minister Nirmala Sitharaman on 23rd July.
• Even strong Modi supporters expressed anger over the government's financial policies.
• Public sentiment shifted dramatically from earlier support to criticism over tax issues.
• Comedian Abhijit Ganguly's viral tweet highlighted excessive taxation on earnings, spending, and investments.

Capital Gains Tax

• Short Term Capital Gains Tax (STCG): Increased from 15% to 20%
• Long Term Capital Gains Tax (LTCG): Increased from 10% to 12.5%
• Exemption for profits under ₹125,000 (previously ₹100,000).
• Increased taxes seen as detrimental, especially for those investing in stocks and mutual funds.

Futures and Options Trading

• Securities Transaction Tax increased:
  • Futures: from 0.0125% to 0.02%.
  • Options: from 0.0625% to 0.1%.
• Government rationale: Addressing stock market bubble and instability.

Economic Survey Insights

• Economic Survey 2023-2024 discussed excessive claims of equity markets leading to instability.
• Shift in government narrative from stock market growth as an indicator of economic health to a caution against bubbles.

Unemployment Concerns

• The Economic Survey noted a need to create 7.85 million jobs annually by 2030.
• High unemployment rate (44.49%) in the 20-24 age group.
• AI's impact on job uncertainty highlighted, regarded as the "biggest disruption for the future of work."

Changes in Tax Structure

• Angel Tax on startups proposed to be removed, praised by opposition.
• Minor changes to income tax slabs beneficial for the middle-class:
  • Standard Deduction increased from ₹50,000 to ₹75,000.
  • Adjustments to tax slabs for various income brackets.
• Overall negligible benefits for the middle-class compared to previous administrations.

Income Tax Revenue Shift

• 19% of government revenue from Income Tax, 18% from GST, and only 17% from corporate tax.
• Shift from corporate tax to income tax collection noted since 2014-15.

Government Schemes

• Five primary schemes announced with a ₹2 trillion outlay, aimed at:
  1. First Time Employment Support for new job registrants.
  2. Benefits for the manufacturing sector.
  3. Employer Support to incentivize hiring.
  4. Skilling Scheme for youth.
  5. Internship opportunities for youth in top companies.
• Implementation and actual impact remain uncertain.

State Fund Allocation

• Focus on Andhra Pradesh and Bihar for budget allocations, raising questions about political motives.
• Significant funds allocated for infrastructure development in both states.

Income Inequality

• Growing income inequality highlighted, with the rich getting richer and the poor getting poorer.
• Government criticized for not taxing the wealthy sufficiently.
• Comparison made to historical income inequality during British rule.

Conclusion

• Emphasis on the need for promoting middle-class growth.
• Call for a more equitable tax structure that targets the wealthy rather than the middle class.