Anushruti Singh
The Modi 3.0 budget is finally out in the open. Finance Minister Nirmala Sitharaman presented her seventh consecutive union budget for 2024-25. This budget is aimed at fostering economic growth and creating ample opportunities.
She listed productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development and next generation reforms as nine priority areas for the government.
On the macroeconomic front, FM Sitharaman decreased the FY25 fiscal deficit target to 4.5% and announced a revised income tax structure in the new regime, as well as an increase in long-term capital gains taxes.
Here are some of the key highlights of the budget announcement:
- Mudra Loan eligibility limit increased to Rs 20 lakhs from Rs 10 lakhs for those who have availed of and successfully repaid loans under TARUN category.
- Credit Guarantee schemes for MSMEs will be introduced. A guarantee cover of Rs 100 crores will be provided for higher loan amounts.
- Angel tax to be abolished.
- Centre to set up 100 branches of India Post Payments Bank in the North-East.
- Twelve industrial parks to be built.
- Rs 10 lakh crores allocated for providing 1 crore houses to the urban poor and the middle class.
- Critical Mineral Mission announced. Government to launch auction of first offshore mining blocks.
- Rental housing scheme announced for working class. Government will facilitate dormitory type rental housing for industrial workers in PPP mode.
- Three employment-linked schemes to be launched based on enrolment in the EPFO. Budget proposes to allocate Rs 2 lakh crores for job creation over 5 years.
- One-month wage to be provided to all new employees as a direct benefit transfer in three instalments of up to Rs 15,000. The eligibility salary limit will be Rs 1 lakh per month.
- Internship scheme for 1 crore youth in 500 top companies with Rs 5,000 per month as internship allowance and one-time assistance of Rs 6,000 to be provided.
- Rs 1.52 lakh crores allocated for agriculture and allied sectors.
India Inc is hailing the budget as a forward-looking framework to boost India’s growth trajectory, particularly for the MSME sector. Here is what industry insiders think about the budget announcements—
Strong commitment to fiscal consolidation
Suman Chowdhury, Chief Economist & Head of Research, Acuité Ratings says the budget is on expected lines.
“The government has reiterated its strong commitment to fiscal consolidation. From a figure of 5.1% in the interim budget, the fiscal deficit target has been further reduced to 4.9%. Gross borrowings of the central government are projected to reduce to Rs 14.01 lakh crores. This will give a significant boost to the bond markets,” he says.
According to him, employment generation is one of the strong themes in the budget. Three separate schemes have been announced where incentives will be provided to both new employees and employers for new jobs. This is expected to facilitate the creation of more than 2 crore new jobs. A step up in job creation will be positive for private consumption over the medium term.
“The tweaks in the tax slabs for the new tax regime will reduce the tax payouts for mid-income salaried persons. The standard deduction amount has been increased to Rs 75,000 from Rs 50,000. The tax saving is estimated to be up to Rs 17,500 depending on one’s income levels. This will give a moderate push to consumption. Further, these measures will also prompt taxpayers to move to the simpler new tax regime,” he asserts.
Mixed bag of measures
The Union Budget 2024 appears to be a mixed bag of measures aimed at both individuals and businesses, feels Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital Ltd.
“The Union Budget has presented a clear growth-oriented agenda, with several measures aimed at boosting economic activity. The increased Mudra loan limit is a direct shot in the arm for small businesses, a sector that is the backbone of our economy. Coupled with the revised tax slabs offering relief to taxpayers, this could potentially lead to increased consumption and investment,” he says.
The government’s focus on education and skill development, especially for women, is commendable. Initiatives like increasing higher education loan limits and setting up women-specific skill development programmes are steps in the right direction. While the cancellation of angel tax is a major win for the start-up ecosystem, the true test of this budget will lie in its implementation. The success of initiatives like the integrated technology system for IBC will be crucial in improving the business environment.
“Overall, the budget seems to strike a balance between populist measures and structural reforms,” he adds.
A balanced budget
Barring the capital gains tax dampener for the investor community and the removal of indexation benefit, the Union Budget was balanced and consistent in policy, says Amar Ambani, Executive Director, YES SECURITIES.
“Brushing aside concerns around more populism, the target set for the fiscal deficit at 4.9% is a huge positive. The agriculture package of Rs1.5 lakh crores is along expected lines and will help provide a fillip to the rural economy. The slight relaxation in personal income tax slabs helps on the consumption front as well. There has been a material push in uplifting the financial health and borrowing ability of MSMEs,” he contends.
According to him, the capital expenditure outlay of the government of 3.4% as a percentage of GDP is also robust and in line with their policy. Notably, the government is focusing on further digitising the economy with land and housing registry. “I sense an even better budget next year, with the finance minister mentioning a comprehensive review of the Income Tax Act to simplify taxation and reduce disputes, as well as a customs duty rate structure overhaul to correct inverted duty structures,” he adds.
A bonanza for MSMEs
KV Srinivasan, Executive Director and CEO, Profectus Capital Pvt Ltd thinks this budget is a bonanza for MSMEs.
“Measures like the vastly enhanced Credit Guarantee of up to Rs 100 crores and an increase in MUDRA limits should facilitate capital expenditure for the expansion and modernisation of MSMEs in the manufacturing sector. Wider coverage of TReDS and credit for MSMEs in the early stage of stress should help them manage working capital and cut cash flow cycles,” he avers.
Abolishing the angel tax is another welcome measure that will help bring more FDI into the start-up sector.
“The availability of well-trained manpower and providing formal employment to them has been a serious challenge faced by MSMEs. EPF subsidy and measures for skill enhancement should make this task easier. All in all, it is a very MSME-friendly budget,” he adds.
Angel tax abolishment is a welcome step
The start-up community is hailing the abolition of the angel tax. Akshay Sarma, Chief Financial Officer, Axio, says that the abolition of the angel tax for all investors will boost start-ups and attract diverse investments.
“Simplifying FDI and promoting the Indian Rupee for international investments enhance India’s global economic standing. These steps create a better environment for businesses, foster innovation, and advance India’s global financial position. Continued focus on sector-specific challenges in the NBFC space and the digital economy remains essential for comprehensive economic development and financial inclusion,” he says.
Game-changer for India’s industrial sector
The recent budget is a game-changer for India’s industrial sector, delivering a powerful focus on skill development and job creation. With an allocation of Rs 1.48 lakh crores aimed at skilling 20 lakh youth over five years and upgrading 1,000 industrial training institutes, the initiative is poised to address the sector’s pressing need for a highly skilled workforce.
Dhriti Prasanna Mahanta, Vice President & Business Head, TeamLease Degree Apprenticeship says that the introduction of a one-time wage incentive for first-time employees, delivered through Direct Benefit Transfer (DBT), is set to boost formal employment by making it more attractive for industries to hire and train new talent.
“Additionally, the launch of internship programs in 500 companies, providing real-life exposure and a monthly allowance of Rs 5000, will create direct pathways to employment for young professionals. Companies will benefit from these programmes through reduced recruitment and training costs, with 10% of the training expenses covered by CSR funds. This comprehensive approach ensures that industries gain access to a pipeline of skilled, industry-ready workers, which enhances productivity, drives innovation, and strengthens competitiveness,” he says.
By fostering a better-trained workforce, the budget will enable industries to meet evolving market demands more effectively, contributing to sustained economic growth and industry advancement.
Budget announcements to empower Digital India
The Union Budget 2024-25 demonstrates a clear vision for ‘Viksit Bharat’ with its strong emphasis on infrastructure development and digital transformation. The government’s decision to increase duty on PCBAs for specific telecom equipment by 10-15% reflects a commitment to bolstering ‘Make in India’ in this crucial sector.
Tilak Raj Dua, Director General of the Digital Infrastructure Providers Association (DIPA) says that sector stakeholders are particularly encouraged by the focus on enhancing Digital Public Infrastructure (DPI), which will undoubtedly play a pivotal role in accelerating India’s economic growth. The prioritisation of energy security and infrastructure development aligns perfectly with the telecom sector’s needs for robust and sustainable expansion.
“The budget’s provision for skilling 4.1 crore youth is a commendable step that will significantly enhance our nation’s capabilities and prepare our workforce for the digital future. Furthermore, the emphasis on green energy and the government’s initiatives in solar energy will create a robust infrastructure for a greener India, reducing our dependence on other expensive resources. This aligns well with the telecom sector’s growing focus on sustainable practices and energy-efficient technologies,” he contends.
“This budget lays a solid foundation for India’s digital and sustainable future, paving the way for improved connectivity and technological advancement across the nation. As we move forward, the telecom infrastructure industry stands ready to support and contribute to this transformative journey towards a digitally empowered, skilled, and environmentally conscious India,” he adds.
Budget 2024: A leap towards natural farming
The Union Budget 2024 has unveiled a roadmap towards a sustainable and resilient India, with agriculture and energy security at its core says Gaurav Kedia, Chairman, Indian Biogas Association.
He says that the announcement of initiatives to bring one crore farmers under natural farming, establish 10,000 bio input resource centres, and support FPOs for agri-product marketing are commendable steps.
“These measures are set to significantly benefit the biogas sector. By promoting natural farming, there will be an increased demand for organic manure, a key byproduct of biogas production. Bio input resource centres can serve as hubs for knowledge dissemination and adoption of biogas technology. Moreover, the support to FPOs can facilitate the marketing of fermented organic manure (FOM) as a value-added product. The budget’s focus on productivity, resilience in agriculture, energy security, and innovation aligns well with the biogas sector’s goals. It is anticipated that these initiatives will catalyse the growth of the biogas industry, leading to increased rural employment, reduced carbon emissions, and improved soil health,” he says.
Talking about the emphasis on renewable energy initiatives, Gautam Das – Founder & CEO at Oorjan Cleantech, says, “PPPs, investment in R&D, Production Linked Incentive (PLI) schemes, easy land acquisition and resolution of ROW issues for open access projects will help India achieve its aspirations to generate 500 GW of renewable power by 2030. Faster pace of solar energy adoption is a critical aspect to reduce over dependence on fossil fuels and improve environmental impacts. A time bound and transparent implementation of policies are key, and the implementations are moving well directionally.”
As the dust settles on the 2024 Union Budget, the reactions from various sectors underline its ambitious and comprehensive nature. The focus on MSMEs, job creation, and fiscal prudence promises a forward-looking trajectory for India’s economy. The abolishment of the angel tax has particularly resonated with the start-up community, while increased allocations for agriculture and the renewable energy sectors signal a commitment to sustainable growth.
However, the true test of this budget will lie in its implementation. The government’s ability to deliver on its promises will determine the real impact of these announcements. With an eye on fiscal consolidation and strategic investments, the budget aims to strike a balance between immediate relief and long-term reforms.
In the words of Suman Chowdhury, “The government’s strong commitment to fiscal consolidation and job creation is a positive step forward.” As industry leaders and economists continue to dissect the finer points, the general consensus remains optimistic.
Ultimately, Budget 2024-25 lays a robust foundation for India’s future. By fostering an environment of growth, innovation, and inclusivity, it sets the stage for a resilient and prosperous economy. As we move forward, the key will be to ensure that these measures translate into tangible benefits for every citizen, driving India towards its vision of a ‘Viksit Bharat’.
