Date and Presenter: India’s Finance Minister presented the Union Budget on July 23, 2024. This was her 7th consecutive budget, the most by any Finance Minister in India.
Economic Context: This budget comes after the elections and has sparked chaos regarding its implications for the middle class and employment.
Four Major Focus Areas of the Budget
Employment and Skilling
Goal: Facilitate employment and skills for 4.1 crore youth over 5 years with a budget of ₹2 lakh crores.
Budget includes:
One-time wage support for first-time formal sector job holders, subsidizing up to ₹15,000.
Incentives for job creation in manufacturing for employers hiring freshers.
Support to increase women’s workforce participation through working hostels.
Criticism: Business owners highlight a skills gap rather than financial incentive issues.
MSMEs (Micro, Small, and Medium Enterprises)
Importance: MSMEs employ over 11 crore people and contribute 30% of GDP, yet only 14% have access to credit.
Key Schemes:
Credit Guarantee Scheme: Allows MSMEs to access loans without collateral.
Streamlined credit assessment through public sector banks.
Continued funding for MSMEs at risk of default during market shocks.
Export Hub to support MSMEs in international trade.
Farmers and Rural Development
Budget Increase: Agricultural spending increased to ₹1.52 lakh crores.
Focus Areas:
Research on climate-resilient crops and increasing agricultural productivity.
Support for natural farming and upgrading 1,000 training institutes.
Connectivity program under Pradhan Mantri Gramin Sadak Yojana for 25,000 villages.
Middle Class Concerns
Criticism of the new tax regime, which many believe is detrimental leading to high taxes burdens in other areas.
New Tax Slabs Explained:
Tax rate structure changes aimed to reduce burden but capital gains taxes raised, increasing dissatisfaction among middle-class taxpayers.
Example of tax implications for a salaried individual earning ₹20 lakh p.a.
Total tax post deductions could yield a savings of ₹10,000 compared to previous policies.
Financial Management Overview
Fiscal Deficit Reduction: Financial management has improved with a decrease in fiscal deficit from 99.2% to 4.99%.
Revenue Sources: 27% of revenue from borrowings, indicating a positive increase from last year.
Political Allocations and Criticisms
State Allocations Favoring: Special allocations for Andhra Pradesh and Bihar, raising concerns over lack of support for states struggling financially, such as Manipur.
Importance of balanced allocations to maintain political stability and equity in development.
Sectoral Opportunities from the Budget
Renewable Energy: Investments in renewable energy are expected to benefit companies focused on solar energy.
FMCG: Increased rural spending will likely boost FMCG companies as consumer demand rises.
Pharmaceuticals: Watch for opportunities following subsidy increases.
Summary of Insights
Overall, while some initiatives in the Union Budget seem promising (like MSME support), many feel the measures for employment and education are inadequate due to a lack of focus on practical skills and education improvements.
Importance of Implementation: Policies need effective implementation to have a true impact. The government’s credibility rests on these outcomes.
Closing Thoughts
The information shared is for educational context and does not constitute investment advice.
Please take time to review additional resources for a comprehensive understanding of the budget's implications.