Summary of Public Reaction to Budget 2024

Jul 29, 2024

Lecture Notes: Reaction to Budget 2024

Overview of Government Reactions

  • Public Discontent: Even staunch Modi supporters are angered by the government's budget decisions.
  • Concerns Over Income Inequality: Income inequality in India is highlighted as being worse than during British rule.
  • Social Media Reaction: A shift in public sentiment from support to disappointment after Budget 2024 announcement.

Key Points from Budget 2024 Presentation

Finance Minister's Presentation

  • Date: 23rd July 2023.
  • Public Reaction: Widespread negativity from the public, including viral tweets criticizing the Finance Minister, Nirmala Sitharaman.
  • Tweet Highlights: Many expressed frustration over perceived oppressive tax policies.

Capital Gains Tax Overview

  • Types of Capital Gains Tax:
    • Short-Term Capital Gains (STCG): Tax increases from 15% to 20% for selling specified assets within one year.
    • Long-Term Capital Gains (LTCG): Tax increases from 10% to 12.5% for assets held longer than a year.
  • Exemption Increase: Exemption threshold raised from ₹100,000 to ₹125,000.
  • Public Impact: Particularly affects stock market investors and futures/options traders due to increased tax burdens.

Economic Justification

  • Economic Survey Insights:
    • Emphasizes concerns about stock market bubbles and potential instability.
    • Urges cautious investment practices, discouraging Futures and Options trading.
  • Focus on Unemployment:
    • Details the need for 7.85 million jobs annually by 2030.
    • High unemployment rate noted among youth, emphasizing AI's disruption of job markets.

Recommendations and Courses

  • Artificial Intelligence Upskilling: Introduction of a ChatGPT course designed to enhance productivity and skills in AI applications for various professional fields.

Non-Financial Assets Taxation

  • LTCG Tax on Property: Decreases from 20% to 12.5%, but removal of indexation benefits may lead to higher taxes on actual gains after accounting for inflation.
  • Purpose of Changes: Discouraging speculation in property prices to stabilize the market.

Criticism of Tax Structures

  • Angel Tax: Removal welcomed for benefiting startups.
  • Income Tax Changes: Minor enhancements with little substantive benefit for the middle class.
    • Increased Standard Deduction from ₹50,000 to ₹75,000.
    • Tax slab thresholds adjusted slightly but still burdensome compared to past administrations.

Government Revenue Changes

  • Tax Revenue Shifts: Notable decline in corporate tax contribution to governmental revenue, contrasted by higher burdens on income tax payers.

Future Policies and Strategies

  • Job Creation Initiatives: Five schemes proposed totaling ₹2 trillion aimed to support employment, particularly in manufacturing and service sectors.
  • State Funding Allocations: Significant budget allocations for Andhra Pradesh and Bihar in preparation for upcoming elections, raising questions about political motivations.

Conclusion

  • Growing Income Inequality: Evidence suggests widening gap between rich and poor; the government is urged to address middle-class needs better.
  • Future Outlook: The implications of the 2024 budget and policies on the Indian economy remain uncertain.
  • Call to Action: Encouragement for considering tax structures that favor the middle class over wealthy individuals.

Note: Review data supporting income inequality claims and implications of proposed taxation changes for further understanding.