India Budget 2024/25: Key Highlights and Analysis

The India fiscal plan 2024 sparked a wide range of reactions. People had different views on it. The budget aimed to boost economic growth and got mixed reviews. Critics say it’s just a way to gain power by helping allies like Janata Dal (United) and the Telugu Desam Party, ignoring some areas.

On the other hand, some like Kiran Mazumdar Shaw praised the focus on innovation and start-ups. She welcomed the end of angel tax. Union Minister Gajendra Singh Shekhawat also backed the budget, seeing it as in line with Prime Minister Modi’s vision. He highlighted its focus on women, MSMEs, and sustainable growth.

The budget introduced a new scheme to help MSMEs with financial access. It also set aside Rs 1 lakh crore for research and prototype development¹. The government is committed to improving skills in clean energy.

Key Takeaways

The Rs 1 lakh crore financing pool for the Anusandhan National Research Fund is a positive step for innovation¹.
The new credit guarantee scheme aims to resolve MSME financial access gaps¹.
STT and TDS adjustments are key tax reforms introduced this year².
An increased focus on skill development and reskilling in the clean energy sector¹.
Supported policies aim to transition MSMEs to the Indian Carbon Market mode¹.

Overview of India Budget 2024/25

The India Budget 2024/25 outlines a plan to boost the nation’s economy and ensure sustainability. It aims to tackle current challenges and encourage innovation and growth.

Main Objectives and Focus Areas

The budget focuses on making the economy resilient, creating jobs, advancing technology, and improving research. It plans to spend INR 2 Lakh Cr on schemes to help 4.1 Cr youth find work over five years³. Another INR 1.48 Lakh Cr will go towards education, jobs, and skills to get people ready for the future⁴.

It also invests heavily in agriculture, setting aside INR 1.52 Lakh Cr for farming and related sectors⁴. This money will help introduce new, resilient crops and support sustainable farming. The budget also includes a Credit Guarantee Scheme for MSMEs in manufacturing, covering up to INR 100 Cr⁴.

Expected Economic Impact

This budget is expected to have a big positive effect on GDP. It aims to boost demand and support long-term growth. The budget makes it easier to do business and encourages manufacturing³.

It also focuses on helping vulnerable groups like Scheduled Castes, Scheduled Tribes, and children, and supports gender equality³. The budget is careful with money but still invests in key areas. This approach is expected to help many sectors and meet the needs of the Indian economy.

Fiscal Strategy and Economic Policies

The 2024/25 budget focuses on sustainable growth and fiscal discipline. It aims to improve tax laws and public spending. This will make processes smoother and boost economic stability.

Tax Reforms and Simplification

Tax reforms are a key part of the 2024/25 budget. The government wants to make tax laws simpler. This will cut down on legal battles and give taxpayers more certainty.

They plan to expand safe harbour rules and make transfer pricing more appealing. The Finance Minister suggests cutting income tax rates by up to ₹17,500 a year. This means an extra ₹1,458 a month for those earning up to ₹12 lakh a year.

They also want to increase standard deductions for salaried workers and pensioners by ₹25,000 and ₹10,000, respectively⁵. There will be slight increases in long-term and short-term capital gains taxes. A small rise in the Securities Transaction Tax (STT) on Futures and Options (F&Os) is also planned⁶.

Public Investment and Cost Reductions

Public spending is a big part of the budget, pushing for economic reforms. ₹1 lakh crore is set aside for private sector research and innovation⁷. The fiscal deficit has been cut to 4.9% of GDP, aiming for 4.6% by 2025-26⁶.

₹10 lakh crore is allocated for PM Awas Yojana Urban 2.0 for housing, with another ₹2.2 lakh crore for affordable housing⁷. Duties on capital equipment and commodities are being reduced. This move is to boost India’s export competitiveness and support energy transition.

The goal is to consolidate the fiscal deficit to 4.9% of GDP, lower than the Interim Budget’s 5.1%⁵. The budget shows a commitment to balanced spending. It aims to increase economic growth while ensuring sustainable development.

India budget tax policy includes significant reforms aimed at simplifying tax laws.
Public spending initiatives target housing, research, and innovation.
Economic reforms emphasized through fiscal deficit reduction and duty cuts.

Regional Allocations and Funds Distribution

The India Budget 2024/25 has given big funds to states like Bihar and Andhra Pradesh. These funds aim to fix regional gaps and support balanced growth. This shows the government’s promise to help these states.

Allocations for Bihar and Andhra Pradesh

Bihar and Andhra Pradesh are getting more money for the 2024/25 budget. Bihar will get a big part of the ₹11.11 lakh crore for capital spending. This money will help improve infrastructure and schools⁸. Andhra Pradesh got ₹15,000 crore to support development projects⁹.

These funds show the government’s focus on helping Bihar and Andhra Pradesh. The goal is to better connect these states and improve services. This will help grow the economy and create jobs.

Impact on Other Regions

While Bihar and Andhra Pradesh got a lot, some say the money isn’t spread out fairly. Critics say some areas are left behind, causing uneven growth⁸. But, Finance Minister Nirmala Sitharaman says the budget makes sure all states get their fair share.

For instance, Uttar Pradesh gets the most Union taxes and duties, about 18%, which is ₹223,737.23 crore⁸. The budget plans to give Rs 23,48,980 crore to states and territories in 2024-25, a 11.9% increase from last year¹⁰. These figures show the government’s effort to spread funds evenly across India, promoting growth for everyone.

Agriculture and Rural Development

In the India Budget 2024/25, agriculture and rural development are key areas. They show a focused effort to help rural economies grow. The main topics include Minimum Support Prices (MSP) and subsidies for things like fertilizers and pesticides.

Minimum Support Prices (MSP)

The MSP policy helps farmers get a fair price for their crops. The government promises to keep the MSP at least 50% above production costs¹¹. But, the budget for agriculture and related areas has dropped from 5.44% in 2019 to 3.15% in 2024/25¹². This has worried farmers and critics.

Subsidies for Fertilizers and Pesticides

Fertilizer subsidies are key for farming that lasts. Yet, the budget cut these subsidies by about 34.7% from last year, saving ₹87,238 crores¹². This could really affect farmers who need these subsidies to keep farming.

On the other hand, the budget plans to release 109 types of 32 crops that are high-yielding and good for the climate¹¹. It also sets aside INR 152,000 crore for agriculture and related areas. This is to improve infrastructure and support India’s agriculture¹¹.

Infrastructure and Railways

The 2024/25 budget shows the Indian government’s big plans for infrastructure, especially railways. It keeps the funding for transport ministries the same as last year. The budget for Railways and Highways is Rs 11,11,111 crore, which is 3.4% of the GDP¹³.

Budget Allocations and Projects

The budget for the high-speed rail project, like the Mumbai-Ahmedabad corridor, has jumped to Rs 25,000 crore from Rs 18,500 crore last year¹⁴. Also, the total money for railway projects has gone up from Rs 1.10 lakh crore to about Rs 2.52 lakh crore¹⁴.

Big plans include adding 3,000 new trains and laying 5,000 km of tracks every year for the next five years. Over 1,300 railway stations will also get modernized, making travel more comfortable with new, big trains¹⁴.

Railway Safety and Developments

The budget focuses on making railways safer with lots of money for track renewal, better signaling, and bridge work. It also includes the Kavach safety system to cut down on accidents¹⁴. The budget for Indian Railways’ day-to-day costs is set at Rs 2,78,500 crore, a bit more than last year¹³. This will help make freight transport more efficient and reduce delays on passenger lines¹⁴.

The budget also puts a lot of money into making rail lines electric and other green projects¹⁴. These efforts show the government’s aim to make railways more sustainable and lower their carbon emissions¹⁴.

Aspect	Details
Capital Expenditure Budget	Rs 11,11,111 crore, 3.4% of GDP¹³
High-Speed Rail Project	Rs 25,000 crore for Mumbai-Ahmedabad corridor¹⁴
New Trains and Tracks	3,000 new trains, 5,000 km of tracks annually¹⁴
Railway Station Upgrades	Modernization of 1,300 stations¹⁴
Safety Investments	Track renewal, advanced signaling, Kavach system¹⁴

The railway budget shows the government’s big plans for India’s infrastructure. It aims to make railways safer, more efficient, and sustainable for the future.

Support for Start-ups and Innovation

The latest budget shows the government’s big push for start-up growth in India. A key move is ending the angel tax, which will boost investments. This tax, introduced in 2012, made start-ups pay 31% on funds from angel investors, scaring off investors¹⁵. Now, getting rid of this tax will make it easier for investors to support Indian start-ups, helping the economy grow and creating jobs¹⁵.

Abolition of Angel Tax

The angel tax was a unique tax that many saw as ineffective and harmful¹⁵. Its removal will help start-ups prove their worth and draw in more investments¹⁵. People like Kiran Mazumdar-Shaw see this as a big win, expecting more start-up growth and innovation in India. This change fits with the goal of making the start-up scene worth $10 trillion by 2030¹⁵.

Funding for Agritech and Industrial Research

The budget also focuses on funding for Agritech and industrial research, which is crucial for innovation⁴. It includes 109 new crops that are more productive and can handle tough weather⁴. These efforts aim to make farming better and more sustainable⁴. Plus, there’s INR 1.52 Lakh Crore for agriculture and related fields, showing a big push for tech and research in these areas⁴.

These steps, along with more funding for innovation, will make India a leader in agritech and industry⁴. The money for private sector innovation will help bring in new tech and make things more efficient, giving India an edge worldwide⁴. By supporting start-ups and focusing on agritech, the government wants to drive big economic and tech growth.

Social Welfare and Women's Development

The 2024/25 budget shows a big push for India’s social welfare and women’s development. It sets aside over Rs 3 lakh crore for programs that help women and girls in different ministries¹⁶.

The Ministry of Women and Child Development got Rs 26,092 crore, a 2.5% increase from last year¹⁶. This money goes towards important projects like Women Hostels and Swadhar Greh¹⁶.

Centrally sponsored schemes under the ministry got Rs 25,848 crore¹⁶. A big chunk, Rs 21,200 crore, is for Saksham Anganwadi and POSHAN 2.0. These programs fight malnutrition and help with early childhood care¹⁶.

Also, Mission VATSALYA got Rs 1,472 crore for child protection, and Mission Shakti got Rs 3,145 crore¹⁶. The SAMBAL sub-scheme, focusing on women’s safety, got Rs 629 crore¹⁶.

The National Institute of Public Cooperation and Child Development (NIPCCD) got Rs 88.87 crore, and the Central Adoption Resource Agency (CARA) got Rs 11.40 crore¹⁶. India also gave Rs 5.60 crore to UNICEF and kept the Nirbhaya Fund at Rs 500 crore¹⁶.

The budget includes Rs 10 lakh in loans for students going to college in India¹⁷. It also plans to help 4.1 crore youth get jobs or skills over 5 years with Rs 1.48 lakh crore¹⁷. It shows how gender equality is part of the budget, including funding for hostels for working women¹⁷.

Stakeholder Reactions and Criticism

The India Budget 2024/25 has sparked a lot of debate. Critics point out several issues, while supporters see new steps to boost growth.

Criticism from Opposition Parties

Opposition leaders, like Congress’s Mallikarjun Kharge, say the budget doesn’t help all regions equally. They’re upset about the little money given to Karnataka¹⁸. The Karnataka State Sugarcane Growers’ Association also feels ignored, wanting more help for farmers¹⁸.

There are worries that the education budget might make students rely too much on loans¹⁸. Opposition says the extra money for education and jobs might not solve the big problems¹⁹.

Praise and Support from Industry Leaders

But, many in the industry like the budget a lot. They’re happy about more money for infrastructure and schemes for women and girls²⁰. The new tax rules are seen as good for saving money and getting more deductions²⁰.

Leaders also like the focus on new ideas and helping small businesses with a credit scheme¹⁹. Starting new medical colleges and hostels for working women are seen as big steps forward¹⁹.

Conclusion

The India Budget 2024/25 presents a detailed plan for strong economic growth. It focuses on making growth inclusive. The budget includes tax reforms, more public investment, and support for different sectors. It also raises the standard deduction for salaried employees to INR 75,000 from INR 50,000²¹²².

Three new schemes under the “Employment Linked Incentive” program aim to increase employment. They offer financial incentives based on EPFO contributions²¹. This is part of a plan to create more jobs and get more people working. The budget also removes the Angel Tax for all investors, helping start-ups and innovation²¹.

The budget puts a lot into infrastructure, technology, healthcare, and education. It cuts Customs Duty for essential goods to lower costs and boost the economy²². These steps aim to create a strong economy that helps both city and rural areas. The budget gets mixed reviews from different groups, showing a careful plan for long-term economic growth and wealth.

FAQ

What are the main objectives of India’s Budget 2024/25?

The main goals are to make the economy more resilient, create more jobs, advance technology, and support research. It aims to help industries grow, make doing business easier, and boost manufacturing.

How does the budget impact GDP and overall economic growth?

The budget aims to create a job-friendly environment and support various industries. This will help increase GDP growth and make the economy more stable.

What tax reforms are included in the 2024/25 budget?

The budget simplifies tax laws, cuts down on legal disputes, and makes transfer pricing easier. It also aims to make the assessment process smoother, offering more certainty for businesses.

How does the budget allocate funds for public investment and cost reductions?

It sets aside a big budget for private sector research and innovation. It also cuts duties on equipment and goods to make India more competitive in exports.

Which regions benefit from specific allocations in this budget?

Regions like Bihar and Andhra Pradesh get special funding. Finance Minister Nirmala Sitharaman says the funds are spread out fairly across all states.

What are the criticisms regarding regional allocations and fund distribution?

Critics, like Congress President Mallikarjun Kharge, say some areas like Kalyan-Karnataka-Hyderabad are overlooked. They believe the funding favors political allies over others.

How does the budget address agriculture and rural development?

The budget promises to support agriculture but has faced criticism for not making MSP for farmers official or providing enough subsidies for fertilizers and pesticides. Still, it aims to improve rural economies.

What improvements are proposed for infrastructure, specifically railways?

The budget plans to improve railway safety and start new projects. Critics say it doesn’t focus enough on fixing tracks and making coaches. But, these efforts aim to upgrade India’s transport network.

How does the budget support start-ups and innovation?

Ending the angel tax is a big step to encourage start-up investments. It also funds agritech and industrial research to boost innovation and growth in the private sector.

What social welfare programs and initiatives for women’s development are included?

Over Rs 3 lakh crore is set aside for women and girls. This shows a strong commitment to their economic empowerment and equality. It also helps marginalized groups.

What are the differing perspectives on the 2024/25 budget from stakeholders?

Critics like Mallikarjun Kharge point out regional inequalities and unmet needs. Supporters, such as Kiran Mazumdar Shaw, see positive reforms for innovation, agriculture, and the economy.

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