Union Budget 2024-2025: Unveiling India's Fiscal Roadmap

Introduction

On February 1st, 2024, Finance Minister Nirmala Sitharaman presented the Union Budget for the upcoming financial year (2024-2025) to the Parliament. Packed with measures aimed at bolstering economic growth, promoting fiscal consolidation, and addressing social welfare concerns, the budget has garnered attention across various sectors.

Fiscal Consolidation & Growth

Fiscal Deficit: The budget aims to reduce the fiscal deficit to 5.1% of GDP in 2024-25, adhering to the path towards 4.5% by 2025-26. This commitment to fiscal prudence aims to attract investments and stabilize the economy.

Capital Expenditure: A 11.1% increase in capital expenditure to ₹11,11,111 crore marks a significant push for infrastructure development. This is expected to create jobs, stimulate the economy, and improve connectivity.

Taxation: Changes in personal income tax brackets and introduction of new tax slabs offer relief to various income groups. Additional deductions for self-employed individuals and senior citizens are welcome changes. However, the increase in surcharge for high-income earners might dampen investor sentiment.

Boosting Key Sectors

Agriculture: Increased focus on promoting farmer income through schemes like PM Kisan Samman Nidhi and Krishi Udyog Mission. Allocation for Kisan Rail to facilitate transportation of agricultural produce across the country.

Manufacturing: PLI (Production Linked Incentive) schemes continue to be expanded across key sectors like electronics, automobiles, and textiles to attract investments and boost domestic manufacturing.

MSME: Focus on facilitating credit flow to MSMEs through dedicated funds and easing regulatory requirements. Introduction of an "MSME Growth Hub" scheme to strengthen their market access and competitiveness.

Infrastructure: Increased allocation for railways, highways, and urban infrastructure projects like metro rail expansion. Focus on developing smart cities and improving urban mobility.

Green Initiatives: Increased focus on renewable energy generation with a target of 280 GW by 2030. Allocation for green hydrogen mission and battery storage solutions.

Social Welfare & Development

Education: National Education Mission receives increased funding to improve school infrastructure and learning outcomes. Focus on promoting vocational training and skill development through Skill India Mission.

Healthcare: Expansion of Ayushman Bharat scheme to cover more beneficiaries and increase access to affordable healthcare. Allocation for setting up new medical colleges and improving healthcare infrastructure.

Affordable Housing: PM Awas Yojana (Gramin) aims to build 2 crore more rural houses in the next five years. Increased allocation for urban housing schemes like PMAY-Urban to address housing shortage.

Rural Development: Increased focus on rural infrastructure development, promoting rural tourism, and creating livelihood opportunities through various schemes like MNREGA and Deendayal Antyodaya Yojana-National Rural Livelihoods Mission.

Other Key Highlights

Digital Economy: Focus on promoting digital payments and financial inclusion through schemes like Digital Rupee and Jan Dhan Yojana. Increased allocation for digital infrastructure and e-governance initiatives.

Startups: Extension of tax benefits for startups and angel investors. Setting up "Innovation Fund" to support early-stage ventures.

Defense: Increased allocation for strengthening India's defense capabilities. Focus on indigenization and modernization of armed forces.

Reactions & Analysis

While the budget has been welcomed for its focus on infrastructure, social welfare, and fiscal consolidation, some industry experts have expressed concerns about the feasibility of achieving ambitious growth targets and the impact of certain tax proposals. The opposition has raised questions about the effectiveness of various schemes and the overall impact on different sections of society.

Public Perception of Union Budget 2024-2025: A Mixed Bag

The Union Budget 2024-2025 has elicited a spectrum of reactions, generating both support and criticism across various segments of society. Here's a breakdown of the key sentiments:

Positives:

Infrastructure Push: Increased capital expenditure and focus on sectors like railways, highways, and urban infrastructure development are welcomed as positive steps towards boosting economic growth and creating jobs.

Social Welfare Measures: Expansion of schemes like PM Kisan Samman Nidhi, Ayushman Bharat, and PM Awas Yojana are seen as beneficial for farmers, underprivileged sections, and those seeking affordable housing.

Tax Relief: Changes in personal income tax brackets and targeted deductions are cheered by some taxpayers, particularly middle-income groups and senior citizens.

Focus on Green Initiatives: Increased allocation for renewable energy and green hydrogen mission resonates with those emphasizing environmental sustainability.

Fiscal Consolidation: Commitment to reducing the fiscal deficit instills confidence in economic stability and attracts investments.

Negatives:

Feasibility Concerns: Ambitious growth targets and expenditure plans raise questions about their feasibility amidst global economic uncertainty.

Impact of Taxation: Increase in surcharge for high-income earners and lack of significant corporate tax reduction might discourage investments and dampen market sentiment.

Efficacy of Schemes: Skepticism exists about the effectiveness of various schemes in delivering intended benefits due to implementation challenges and potential leakages.

Inequality Concerns: Some argue that the budget doesn't sufficiently address income inequality and fails to offer substantial relief to low-income earners.

Rural Sector Focus: While acknowledging rural development initiatives, some critics demand more concrete measures to address issues like agricultural distress and rural unemployment.

Overall

The public perception of the budget depends on individual perspectives, priorities, and economic standing. While the focus on infrastructure, social welfare, and fiscal consolidation finds support, concerns about implementation, feasibility, and potential drawbacks exist. Continued analysis, discussions, and monitoring of actual outcomes will shape the ultimate perception of the budget's success in achieving its stated goals.

Conclusion

The Union Budget 2024-2025 presents a roadmap for India's economic journey in the coming year. Its success will hinge on effective implementation, fostering private sector participation, and navigating global economic uncertainties. Whether it fulfills its aspirations for inclusive and sustainable growth remains to be seen, but it has undoubtedly set the stage for a year of economic engagement and scrutiny.