Budget 2024 Reaction and Overview

Negative Public Reaction

• Public response to Budget 2024 is highly negative.
• Even staunch Modi supporters are expressing discontent.
• Key criticisms:
  • Perceived favoritism towards wealthy individuals.
  • Increasing burden on the middle class while providing benefits to millionaires/billionaires.
• Notable shift in public sentiment:
  • Pre-Budget: Support for Modi.
  • Post-Budget: Calls for fair treatment, dissatisfaction with tax policies.

Key Tax Points

• Short-Term Capital Gains (STCG) Tax: Increased from 15% to 20%.
• Long-Term Capital Gains (LTCG) Tax: Increased from 10% to 12.5%.
  • Exemption raised from ₹100,000 to ₹125,000 for LTCG.
• Securities Transaction Tax: Increased for Futures from 0.0125% to 0.02% and for Options from 0.0625% to 0.1%.

Capital Gains Tax Explanation

• Types
  • STCG: Applies to asset sales within one year.
  • LTCG: Applies to asset sales after one year.
• Public Discontent: Increased taxes percieved as harmful to investors.

Economic Survey Insights

• Market Stability: Government warns that excessive claims in the equity market indicate instability.
• Shift in Government Stance: Previously highlighted stock market growth; now cautioning against excessive market growth.
• Unemployment Trends:
  • 7.85 million jobs needed annually by 2030.
  • High unemployment rate in younger demographics (44.49% for ages 20-24).
• AI Impact: Considered disruptive for various job sectors.

Implications of Budget Changes

• LTCG Tax for Non-Financial Assets: Reduced rate (20% to 12.5%), but indexation benefits removed leading to potential tax increases for older assets.
• Impact on Middle-Class Homebuyers: Increased property prices due to removal of indexation may affect affordability.

Angel Tax and Income Tax Changes

• Angel Tax: Proposed removal positively received by start-up community.
• Income Tax Adjustments:
  • Standard Deduction increased to ₹75,000.
  • Incremental changes to tax slabs for additional income brackets.

Criticism of Government Tax Policy

• Discrepancy in Tax Burden: Middle-class paying higher taxes compared to billionaires who receive tax benefits.
• Government revenue sources are increasingly reliant on direct taxation instead of corporate taxes.

Government Employment Schemes

• Job Creation Initiatives:
  • First Time Employment Support (up to ₹15,000 for job registrants).
  • Manufacturing sector benefits for both employees and employers.
  • Internship opportunities for youth in top companies.

State Distribution and Focus in the Budget

• Significant allocations to Andhra Pradesh and Bihar seen as political strategy ahead of upcoming elections.
  • Andhra Pradesh: ₹150 billion for Amravati development.
  • Bihar: ₹600 billion for various infrastructure projects and tourism development.

Conclusion: Income Inequality

• Growing income inequality highlighted; situation worsening over decades.
• Critique of prioritizing large corporate interests over small business growth and middle-class support.
• Call for better taxation of wealthy individuals to address income disparity.

Summary

• The general consensus is that the Budget 2024 is viewed as a move that exacerbates existing inequalities and places undue burden on the middle class while favoring the wealthy.