Union Budget 2024 Highlights

Jul 27, 2024

Union Budget 2024 Presentation Notes

Overview

  • Date: July 23, 2024
  • Presenter: Finance Minister of India (7th consecutive budget speech)
  • Focus on four major areas:
    • Employment and Skilling
    • MSMEs (Micro, Small and Medium Enterprises)
    • Farmers and Rural Development
    • The Middle Class
  • Following elections, the budget has sparked notable public response and criticism.

Key Criticisms and Challenges

  • Unemployment Situation: The government's response deemed insufficient.
  • Middle-Class Tax Concerns: High taxes and a lack of novel job creation ideas.
  • Capital Gains Tax Implications: Predictions of stock market slowdown and increased tax on capital gains.
  • Regional Disparities: Political favoritism towards Andhra Pradesh and Bihar, while other states, like Kerala and Manipur, face neglect.

Budget Focus Areas

1. Employment and Skilling

  • Goal: Facilitate employment and skilling for 4.1 million youths over 5 years with a central outlay of ₹2 lakh crores.
  • Schemes Introduced:
    • First-Timer Scheme: One-month wage for youths entering formal jobs for the first time.
    • Job Creation in Manufacturing: Incentives for employers and employees in the manufacturing sector.
    • Employer Focused Scheme: Reimbursement for employers creating new jobs.
    • Women's Participation: Setting up working hostels to promote women in the workforce.
  • Critique: Emphasis on skill-building over financial incentives due to a lack of skilled freshers in the job market.

2. MSMEs

  • Significance: Vital for India's economy, contributing 30% of GDP and employing 11 crore people.
  • Credit Access Initiatives:
    • Credit Guarantee Scheme: Loans for machinery purchase without collateral.
    • Streamlined Loan Assessment: Public sector banks assessing MSMEs internally.
    • Continued funding during economic stress.
    • Trade Receivables Turnover: Reduced threshold for trading receivables allocation.
  • Export Hub Support: Establishing hubs to facilitate MSME exports.

3. Farmers and Rural Development

  • Agricultural Spending: Increased to ₹1.52 lakh crores; rural spending hiked to ₹2.66 lakh crores.
  • Research and New Age Farming: Investment in climate-resilient crop varieties.
  • Natural Farming Initiative: 1 crore farmers to be trained in natural farming methods.
  • Infrastructure Improvement: Connectivity-enhancement schemes for 25,000 villages.

4. The Middle Class and Tax Implications

  • Revised Income Tax Slabs: Intended to reduce tax burden on salaried employees.
  • Deductions: Increase in standard deduction limit from ₹50,000 to ₹75,000.
  • Concerns over Capital Gains Taxes: Increase from 10% to 12.5% and short-term gains from 15% to 20%.
  • Impact of Cess and Deductions on overall tax liability discussed.

5. Financial Management

  • Fiscal Deficit Improvement: Reduced from 99.2% post-COVID to 4.99%.
  • Revenue from Borrowings: Decrease from 34% to 27% of total revenue.
  • Debt to GDP Ratio: Reduced from 89% to 81%.

6. Political Allocations

  • Regional Favoritism:
    • Andhra Pradesh & Bihar: Large allocations in infrastructure and development projects.
    • Neglect of states like Manipur facing crises.

Investment Sectors to Watch

  • Power and Renewable Energy Companies: Increased government support for renewable goals.
  • FMCG Companies: Anticipated boost from rising rural incomes.
  • Custom Duty Adjustments: Expected benefits for gold and silver companies.
  • Pharmaceuticals: Increased allocation for the pharmaceutical industry.

Conclusion

  • Critiques of Employment and Skill Programs: Viewed as ineffective without addressing the skill gap.
  • MSME support acknowledged as essential.
  • Mixed feelings on Tax Changes: Overall aim for a deeper analysis of capital gains tax implications and regional allocations.
  • Skepticism on Budget Implementation: Success depends on the execution of proposed schemes.

For more detailed insights and documents, refer to the links provided in the description.