This analysis breaks down the provided budget speech by sector, highlighting key initiatives, financial allocations, and proposed reforms. Finance Minister Nirmala Sitharaman offered the Union Budget 2024 on July 23rd, 2024, with a focus on job advent, infrastructure improvement, Taxation and assisting Micro, Small and Medium Enterprises (MSMEs).
Please note: This analysis is based solely on the information provided in the budget speech document. It does not include any external data or assumptions.
Overall Budget Estimates 2024-2025:
- Total Receipts (excluding borrowings): ₹ 32.07 lakh crore
- Total Expenditure: ₹ 48.21 lakh crore
- Net Tax Receipts: ₹ 25.83 lakh crore
- Fiscal Deficit: 4.9% of GDP
- Capital Expenditure: ₹ 11,11,111 crore (3.4% of GDP)
Goal: Achieve ‘Viksit Bharat’ (Developed India)
9 Key Priorities:
- Productivity and Resilience in Agriculture
- Employment & Skilling
- Inclusive Human Resource Development and Social Justice
- Manufacturing & Services
- Urban Development
- Energy Security
- Infrastructure
- Innovation, Research & Development
- Next Generation Reforms
Sector-wise Analysis:
1. Agriculture:
- Allocation: ₹ 1.52 lakh crore
- Focus: Enhancing productivity, climate resilience, and self-sufficiency.
- Transforming Agriculture Research: Comprehensive review of research, focusing on productivity and climate-resilient crops. Funding in challenge mode, including private sector participation.
- New Varieties: Release of 109 high-yielding and climate-resilient crop varieties.
- Natural Farming: Transitioning 1 crore farmers to natural farming in 2 years, with certification, branding, and 10,000 bio-input resource centers.
- Pulses and Oilseeds Missions: Strengthening production, storage, and marketing to achieve self-sufficiency.
- Vegetable Production & Supply Chains: Developing clusters near consumption centers, promoting FPOs, cooperatives, and startups for efficient supply chains.
- Digital Public Infrastructure (DPI): Implementing DPI in agriculture within 3 years, covering farmers and land records. Digital crop survey in 400 districts.
- Shrimp Production & Export: Financial support for Nucleus Breeding Centers and financing for shrimp farming, processing, and export through NABARD.
- National Cooperation Policy: New policy for the cooperative sector’s development, focusing on rural growth and employment.
2. Employment & Skilling:
- Allocation: ₹ 1.48 lakh crore for education, employment, and skilling.
- Focus: Creating employment opportunities, particularly for youth, and enhancing skills.
- Prime Minister’s Package: ₹ 2 lakh crore outlay over 5 years for 5 schemes targeting 4.1 crore youth.
- Scheme A (First Timers): One-month wage subsidy (up to ₹ 15,000) for new employees in all formal sectors, benefiting 210 lakh youth.
- Scheme B (Manufacturing Job Creation): Incentives for employers in the manufacturing sector for hiring first-time employees, benefiting 30 lakh youth.
- Scheme C (Employer Support): Reimbursement of up to ₹ 3,000 per month for 2 years to employers for EPFO contributions of new employees, incentivizing 50 lakh new jobs.
- Skilling Programme: New centrally sponsored scheme for skilling 20 lakh youth over 5 years, upgrading 1,000 ITIs.
- Internship Programme: Internship opportunities in 500 top companies for 1 crore youth over 5 years, with a monthly stipend of ₹ 5,000.
- Women in Workforce: Facilitating women’s participation through working women hostels, creches, skilling programs, and market access for SHG enterprises.
- Skilling Loans: Revised Model Skill Loan Scheme with loans up to ₹ 7.5 lakh and a government guarantee.
- Education Loans: Financial support for loans up to ₹ 10 lakh for higher education, with a 3% interest subvention for 1 lakh students annually.
3. Inclusive Human Resource Development and Social Justice:
- Allocation: ₹ 3 lakh crore for schemes benefiting women and girls.
- Focus: All-round development, particularly for farmers, youth, women, and the poor.
- Saturation Approach: Covering all eligible individuals through various programs, including education and health.
- Support for Economic Activities: Strengthening schemes like PM Vishwakarma, PM SVANidhi, National Livelihood Missions, and Stand-Up India.
- Purvodaya: Development plan for the eastern region (Bihar, Jharkhand, West Bengal, Odisha, Andhra Pradesh) focusing on human resources, infrastructure, and economic opportunities.
- Industrial node at Gaya on the Amritsar Kolkata Industrial Corridor.
- Road connectivity projects worth ₹ 26,000 crore.
- Power projects worth ₹ 21,400 crore.
- New airports, medical colleges, and sports infrastructure in Bihar.
- Andhra Pradesh Reorganization Act:
- Special financial support through multilateral agencies, with ₹ 15,000 crore in the current year.
- Commitment to financing and completing the Polavaram Irrigation Project.
- Funds for infrastructure in Kopparthy and Orvakal nodes on industrial corridors.
- Grants for backward regions.
- PM Awas Yojana: 3 crore additional houses in rural and urban areas.
- Women-led Development: Allocation of over ₹ 3 lakh crore for schemes benefiting women and girls.
- Pradhan Mantri Janjatiya Unnat Gram Abhiyan: Saturation coverage for tribal families in 63,000 villages, benefiting 5 crore tribal people.
- Banking Services in North East: Setting up over 100 India Post Payment Bank branches in the North East.
4. Manufacturing & Services:
- Focus: Supporting MSMEs, promoting manufacturing, and boosting the services sector.
- MSME Support Package:
- Credit Guarantee Scheme: Facilitating term loans up to ₹ 100 crore without collateral for machinery and equipment.
- New Credit Assessment Model: Public sector banks to develop a new model based on digital footprints.
- Credit Support during Stress: Guarantee from a government fund to facilitate credit to MSMEs in the SMA stage.
- Mudra Loans: Enhanced limit to ₹ 20 lakh for successful ‘Tarun’ category borrowers.
- TReDS Onboarding: Reduced turnover threshold for mandatory onboarding to ₹ 250 crore.
- SIDBI Expansion: New branches in MSME clusters within 3 years.
- Food Processing Units: Support for 50 food irradiation units and 100 food quality and safety testing labs.
- E-Commerce Export Hubs: PPP model hubs to facilitate MSME and artisan exports.
- Manufacturing & Services Promotion:
- Industrial Parks: Investment-ready “plug and play” parks in 100 cities and 12 parks under the National Industrial Corridor Development Programme.
- Rental Housing: Dormitory-type accommodation for industrial workers in PPP mode with VGF support.
- Shipping Industry: Reforms to improve the Indian shipping industry’s share and generate employment.
- Critical Mineral Mission: Focus on domestic production, recycling, and acquisition of critical minerals.
- Offshore Mining: Auction of offshore blocks for mineral mining.
- Digital Public Infrastructure (DPI) Applications: Development of DPI applications for various sectors.
- IBC Technology Platform: Integrated platform for improving outcomes under the Insolvency and Bankruptcy Code.
- Voluntary Closure of LLPs: Extending C-PACE services to expedite LLP closures.
- National Company Law Tribunals: Strengthening NCLT and establishing additional tribunals.
- Debt Recovery: Reforming and strengthening debt recovery tribunals.
5. Urban Development:
- Focus: Developing cities as growth hubs and improving urban infrastructure.
- Cities as Growth Hubs: Facilitating development through economic and transit planning and orderly peri-urban development.
- Creative Redevelopment: Framework for brownfield redevelopment with enabling policies and market-based mechanisms.
- Transit Oriented Development: Plans for 14 large cities with populations above 30 lakh.
- Urban Housing:
- PM Awas Yojana Urban 2.0: Addressing the housing needs of 1 crore urban poor and middle-class families with a ₹ 10 lakh crore investment.
- Enabling policies for efficient and transparent rental housing markets.
- Water Supply and Sanitation: Promoting water supply, sewage treatment, and solid waste management projects in 100 large cities.
- Street Markets: Developing 100 weekly ‘haats’ or street food hubs in select cities over the next five years.
- Stamp Duty: Encouraging states to moderate stamp duty rates, particularly for properties purchased by women.
6. Energy Security:
- Focus: Ensuring energy availability, accessibility, affordability, and transitioning towards cleaner sources.
- Energy Transition Policy: Balancing economic growth, employment, and environmental sustainability.
- PM Surya Ghar Muft Bijli Yojana: Installing rooftop solar plants for 1 crore households to receive up to 300 free electricity units monthly.
- Pumped Storage Policy: Promoting pumped storage projects for electricity storage and integrating renewable energy.
- Nuclear Energy: Partnering with the private sector for Small Modular Reactors (SMRs) and R&D in nuclear energy.
- Advanced Ultra Super Critical (AUSC) Thermal Power Plants: Setting up an 800 MW commercial plant using indigenous AUSC technology.
- ‘Hard to Abate’ Industries: Roadmap for transitioning from energy efficiency targets to emission targets and integrating with the Indian Carbon Market.
- Support for Traditional Industries: Energy audits and financial support for cleaner energy adoption in 60 MSME clusters.
7. Infrastructure:
- Allocation: ₹ 11,11,111 crore for capital expenditure.
- Focus: Continued investment in infrastructure development.
- State Government Investment: Encouraging states to match central government infrastructure investments.
- Private Investment: Promoting private participation through viability gap funding and enabling policies.
- Pradhan Mantri Gram Sadak Yojana (PMGSY) Phase IV: Providing all-weather connectivity to 25,000 newly eligible rural habitations.
- Irrigation and Flood Mitigation:
- Financial support for flood control and irrigation projects in Bihar (₹ 11,500 crore).
- Assistance to Assam for flood management projects.
- Assistance to Himachal Pradesh, Uttarakhand, and Sikkim for flood reconstruction and rehabilitation.
- Tourism:
- Development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Bihar.
- Comprehensive development initiative for Rajgir.
- Development of Nalanda as a tourist center and reviving Nalanda University.
- Assistance for tourism development in Odisha.
8. Innovation, Research & Development:
- Focus: Fostering a culture of innovation and promoting R&D activities.
- Anusandhan National Research Fund: Operationalizing the fund for basic research and prototype development.
- Private Sector R&D: Mechanism for private sector-driven research and innovation with a ₹ 1 lakh crore financing pool.
- Space Economy: ₹ 1,000 crore venture capital fund to support the growing space sector.
9. Next Generation Reforms:
- Focus: Implementing reforms to improve productivity, market efficiency, and ease of doing business.
- Economic Policy Framework: Outlining the approach to economic development and next-generation reforms.
- Competitive Federalism: Incentivizing states for faster reform implementation through interest-free loans.
- Land Reforms:
- Incentivizing states to complete land administration, planning, and management reforms in rural and urban areas within 3 years.
- Assigning Unique Land Parcel Identification Numbers (ULPIN) or Bhu-Aadhaar to all lands.
- Digitizing land records and cadastral maps.
- Labour Reforms:
- Comprehensive services for labour, including employment and skilling, through an integrated e-shram portal.
- Revamped Shram Suvidha and Samadhan portals for easier compliance.
- Capital and Entrepreneurship Reforms:
- Financial sector vision and strategy document for the next 5 years.
- Taxonomy for climate finance to enhance capital availability for climate action.
- Variable Capital Company structure for financing aircraft and ship leasing and private equity funds.
- Simplifying FDI and overseas investment rules.
- NPS Vatsalya scheme for contributions by parents/guardians for minors.
- Technology Adoption: Stepping up technology adoption for digitalization and improving productivity.
- Ease of Doing Business: Jan Vishwas Bill 2.0 and incentivizing states for implementing Business Reforms Action Plans.
- Data and Statistics: Improving data governance, collection, processing, and management using technology.
- New Pension Scheme (NPS): Reviewing and addressing issues related to the NPS while maintaining fiscal prudence.
Taxation:
- Indirect Taxes:
- GST: Further simplifying and rationalizing the GST structure and expanding it to remaining sectors.
- Customs Duties: Comprehensive review of the rate structure to simplify, reduce inversions, and minimize disputes. Sector-specific changes to support domestic manufacturing, promote exports, and reduce input costs.
- Direct Taxes:
- Comprehensive Review of Income Tax Act, 1961: Simplifying the Act to reduce litigation and provide tax certainty.
- Simplification for Charities and TDS: Merging tax exemption regimes for charities and simplifying TDS rates.
- Reassessment Simplification: Reopening assessments beyond three years only for escaped income exceeding ₹ 50 lakh.
- Capital Gains Simplification: Rationalizing short-term and long-term capital gains tax rates and increasing the exemption limit to ₹ 1.25 lakh.
- Tax Payer Services: Digitalizing all remaining Customs and Income Tax services.
- Litigation and Appeals: Addressing pending appeals, introducing Vivad Se Vishwas Scheme 2024, and increasing monetary limits for filing appeals.
- Employment and Investment: Abolishing angel tax, simpler tax regime for cruise tourism, safe harbor rates for diamond companies, and reducing corporate tax for foreign companies to 35%.
- Deepening Tax Base: Increasing STT on futures and options and taxing income from share buybacks.
- Personal Income Tax: Increasing standard deduction to ₹ 75,000 and family pension deduction to ₹ 25,000 under the new tax regime. Revising the tax slab rates under the new regime.
Revised Tax Slab Rates: Revising the tax slab rates under the new personal income tax regime as follows:
Fiscal Consolidation
The government expects to obtain Rs 32.07 lakh crore in sales for the economic 12 months 2024-25. At the same time, it plans to spend Rs forty eight.21 lakh crore.
The monetary deficit target has been set at four.9% of the Gross Domestic Product (GDP). Fiscal deficit is the distance among government spending and its total income. A lower deficit percent shows higher control of price range. Despite the lower economic deficit of 4.9% of GDP, the government plans to borrow Rs 14.13 lakh crore from the marketplace to finance its expenditure. This borrowing is crucial for protecting the distance among sales and spending.
The price range’s cognizance on financial consolidation displays a balancing act and dealing with expenditure to fulfill developmental wishes whilst retaining borrowing and deficits inside sustainable limits.
Also To Consider
• A Rs 1,000 crore allocation has been made to extend the gap financial system fivefold within the subsequent ten years.
• The Basic Customs Duty (BCD) on cellular phones and chargers has been lowered to fifteen%, imparting comfort to cellphone shoppers.
• Customs responsibility on 25 important minerals for diverse industries has been exempted, with a diminished BCD for two others.
• Custom responsibility on gold and silver reduced to 6%
Conclusion
In conclusion Union Budget 2024 charts a strategic course to navigate India’s economy via dynamic global and domestic demanding situations, prioritizing stability and growth. With a targeted fiscal deficit of 4.9% of GDP, the budget emphasizes monetary consolidation to sustain lengthy-term monetary fitness. Key measures encompass revised profits tax slabs, improved fashionable deductions, and improvements within the National Pension System to bolster financial savings and investments. Initiatives like NPS Vaatsalya for minors and adjusted capital gains tax goal at monetary inclusion and incentivizing long-term
investments. The budget underscores dedication to infrastructure, healthcare, and schooling, critical for inclusive increase and international competitiveness. Overall, Union Budget 2024 targets to balance economic prudence with boom imperatives, laying a resilient foundation for sustainable financial development. Its
units forth transformative reforms while addressing instant socio-economic desires, positioning India as a strong international participant in the years in advance. For in-depth analysis and to pick stocks for long term from these budget highlighted sectors, Visit Jarvis Invest today!