Finance Minister Nirmala Sitharaman unveiled the Union Budget 2024-25 in the parliament today. This marks the first budget of Prime Minister Narendra Modi’s third term. The 2024 budget focuses on nine strategic priorities to create ample opportunities for all. Notably, FM Sitharaman reduced the FY25 fiscal deficit target to 4.5% while introducing a revised income tax structure and increasing the long-term capital gains tax.
The budget also allocated ₹2 lakh crore for five new schemes, emphasising the middle class, employment, skill development, and MSMEs, with a focus on jobs and the skilling of 4.1 crore youth.
Table of Contents
Announcements for MSMEs
Significant announcements were made for MSMEs:
- New Credit Mechanism: A new mechanism to facilitate the continuation of bank credit to MSMEs during stress periods.
- Increased Mudra Loans: The Mudra loan limit has been raised from ₹10 lakh to ₹20 lakh.
- TReDS Platform Threshold: The turnover threshold for mandatory onboarding on the TReDS platform will be lowered from ₹500 crore to ₹250 crore.
- Food Irradiation Units: Financial support for 50 multi-product food irradiation units in the MSME sector.
- E-Commerce Export Hubs: Establishment of E-Commerce Export Hubs in PPP mode to help MSMEs and traditional artisans sell their products internationally.
Development of Industrial Parks
FM announced the development of industrial parks in or near 100 cities with the following proposals:
- Investment-Ready Parks: “Plug and play” industrial parks will be developed in or near 100 cities.
- Industrial Corridor Programme: 12 industrial parks sanctioned under the National Industrial Corridor Development Programme.
- Critical Mineral Mission: Establishment of a Critical Mineral Mission for domestic production, recycling, and overseas acquisition of critical mineral assets.
Employment Linked Incentive Schemes
FM Sitharaman introduced three schemes to incentivize employment, focusing on EPFO enrolment and recognizing first-time employees:
- Scheme A: First-time employees will receive one month’s wage upon entering the workforce in all formal sectors. A direct benefit transfer (DBT) of one month’s salary, up to ₹15,000, will be provided in three instalments.
- Scheme B: Job creation in the manufacturing sector will be incentivized through a scheme linked to employing first-time employees. Both employees and employers will receive incentives based on their EPFO contributions for the first four years of employment.
- Scheme C: Employers will be reimbursed up to ₹3,000 per month for two years towards their EPFO contribution for each additional employee, benefiting those earning up to ₹1 lakh per month and potentially aiding 2.1 lakh youths.
Announcements for Agriculture Sector
Key allocations and initiatives for the agriculture sector include:
- Funding: ₹1.52 lakh crore for agriculture and allied sectors.
- Bio Research Centres: Establishment of 10,000 bio research centres.
- Natural Farming: Over the next two years, 1 crore farmers will be introduced to natural farming with support for branding and certification.
- Supply Chain Clusters: Development of large vegetable production and supply chain clusters near consumption centres.
- Shrimp Breeding: Financial support for shrimp breeding centres, with export facilitation through NABARD.
- Kisan Credit Cards: Launch of Kisan Credit Cards in five states.
- Crop Varieties: Release of 109 varieties of 32 crops.
- Natural Farmers Support: Verification and branding support for natural farmers.
- Self-Sufficiency: Initiatives to ensure self-sufficiency in pulses and oil seeds, and incorporation of 6 crore farmers and their land into a registry.
Revision of Model Skill Loan Scheme
FM Sitharaman proposed revisions to the Model Skill Loan Scheme to benefit 25,000 students annually. Key announcements include:
Revised Tax Structure
FM Sitharaman revised the income tax rate structure in the new regime, resulting in a ₹17,500 saving in income tax.
Capital Gains Tax Announcements
Changes to capital gain taxes include:
- Short-term Capital Gains: Tax on certain financial assets revised to 20%.
- Long-term Capital Gains: Tax revised to 12.5% on financial assets.
- TDS Rate Reduction: TDS rate on e-commerce operators reduced from 1% to 0.1%.
Fiscal Deficit Projections
FM Sitharaman projected the FY25 fiscal deficit at 4.9% of GDP, down from 5.1% in the Interim Budget, with a commitment to reduce the deficit below 4.5%. Key fiscal figures include:
- Expenditure: ₹48.21 lakh crore for FY25.
- Receipts: ₹32.07 lakh crore for FY25.
- Fiscal Deficit: 4.9% of GDP, aiming for below 4.5% next year.
Equalisation levy 2.0, which was applicable on foreign e-commerce supply or service is withdrawn from 1st August, 2024.
Skilling Initiatives
FM Sitharaman unveiled a package to boost skilling, with highlights including:
- ITI Upgradation:1,000 ITIs to be upgraded in a hub-and-spoke arrangement over five years, focusing on outcome and quality in collaboration with states and industry.
- Internships: 1 crore youth to be skilled by top Indian companies over five years, with a 12-month Prime Minister’s Internship offering a monthly allowance of ₹5,000. A one-time assistance of INR 6000 shall be provided to the interns.
Capital Expenditure
The finance minister maintained the capex for FY25 at ₹11.11 lakh crore, equivalent to 3.4% of GDP, as previously announced in the Interim Budget.
Conclusion
The Union Budget 2024-25 lays out a comprehensive plan to address the needs of various sectors and industries, with a strong emphasis on MSMEs, employment, agriculture, and skill development. By revising tax structures, supporting critical industries, and committing to fiscal discipline, the budget aims to drive economic growth and sustainability. The initiatives announced are poised to create significant opportunities and foster an environment conducive to innovation and progress across India.
