Notes on India's Union Budget 2024-25 Presentation

Overview

• Date: 23rd July 2024
• Presenter: Finance Minister of India
• Significance: 7th consecutive budget presentation, marking a record.
• Context: The budget follows elections, causing chaos and controversy.

Major Concerns

• Unemployment: Responses from the government criticized as insufficient for job creation.
• Impact on Middle Class: Budget largely perceived as unfavorable, with increased taxes.
• Political Favoritism: Allegations of favoritism towards states like Andhra Pradesh and Bihar.

Key Themes of the Budget

1. Employment and Skilling

   • Government aims to provide employment for 4.1 crore youth over 5 years with an outlay of ₹2 lakh crores.
   • Incentives for first-time formal sector job entrants (up to ₹15,000).
   • Job creation incentives in manufacturing sector.
   • Employer reimbursements for new jobs created with salaries up to ₹1 lakh.
   • Focus on increasing women's workforce participation through working hostels.
   • Criticism: Value of initiatives questioned; emphasis on skill development needed.

2. MSMEs (Micro, Small, and Medium Enterprises)

   • Critical for India's economy (30% of GDP, 50% of exports).
   • Credit Guarantee Scheme: Term loans for MSMEs without collateral.
   • Streamlined credit assessment to aid those without formal accounting.
   • Support for companies at risk of default to ensure continued funding.
   • Reduction of turnover threshold for converting trade receivables into cash from ₹500 crores to ₹250 crores.

3. Farmers and Rural Development

   • Allocation for agricultural spending increased to ₹1.52 lakh crores.
   • Investment in climate-resilient crops to improve productivity.
   • Support for natural farming and establishment of research centers.
   • Improvement in rural infrastructure under Pradhan Mantri Gram Sadak Yojana.

4. Middle Class Taxation

   • New personal income tax slabs introduced, aimed at reducing tax burdens.
   • Comparison provided for how changes affect individual taxation.
   • Critique regarding increased long-term and short-term capital gains taxes.

Fiscal Management

• Fiscal Deficit: Reduced from 99.2% in 2021 to 4.99% predicted for 2024.
• Revenue from borrowings decreased: now 27%, down from 34%.
• Debt-to-GDP ratio declining: 89% in 2021 to 81% in 2024.

Political Implications

• Specific allocations to Andhra Pradesh and Bihar seen as politically motivated.
  • Major funds allocated for infrastructure and development projects.
  • Concerns raised over lack of attention to states like Manipur, facing socio-political crises.

Sectoral Opportunities

• Bullish Sectors Identified:
  • Renewable Energy: Significant investments expected; beneficial for power companies.
  • FMCG: Increased rural income anticipated to drive consumption.
  • Jewelry: Reduced customs duty on precious metals expected to boost related stocks.
  • Pharmaceuticals: Increased funding likely to affect major companies positively.

Conclusion

• Overall assessment highlights a mix of positive and negative implications from the budget.
• While some initiatives appear promising, skepticism regarding employment measures and potential tax burdens persists.
• Emphasis on aligning investment towards skills and education recognized as vital for economic progress.