The Union Budget 2024 presented by Finance Minister Nirmala Sitharaman has drawn significant attention and generated diverse reactions from various sectors of the economy. Here’s a comprehensive analysis of the key highlights and implications of the budget:
Introduction and Market Reaction
The budget session witnessed a dramatic reaction from the stock market, which plunged by 1100 points during the announcement. The sharp decline was primarily due to the increased taxes on the stock market sector. Short-term capital gains tax was hiked from 15% to 20%, long-term capital gains tax increased from 10% to 12.5%, and the Securities Transaction Tax (STT) on Futures and Options (F&O) trades was also raised. These changes caused a significant drop in market indices, although there was a gradual recovery by the end of the day.
Record-Breaking Budget Speech
Finance Minister Nirmala Sitharaman set a new record by becoming the first finance minister to present the budget for seven consecutive years, surpassing Morarji Desai’s record of six continuous budget presentations.
Key Focus Areas
The budget laid out a clear focus on nine critical sectors:
- Agriculture: Significant allocations were made to enhance agricultural productivity and support farmers.
- Employment: New schemes and initiatives aimed at creating job opportunities for the youth were introduced.
- Urban Development: Investments in infrastructure and urban renewal projects were highlighted.
- Infrastructure: A substantial portion of the budget was allocated to the development of roads, bridges, and railways.
- Innovation: Emphasis was placed on fostering innovation and supporting startups.
- Manufacturing and Services: Measures to boost manufacturing and service sectors were outlined.
- Energy: Investments in renewable energy and energy efficiency projects were proposed.
- Next-Generation Reforms: The government committed to implementing progressive reforms to drive economic growth.
- Inclusive Development: The principle of ‘Sabka Saath, Sabka Vikas’ (inclusive growth) was reinforced.
Youth and Employment
To address the pressing issue of unemployment, the budget introduced five new schemes with a total outlay of over ₹2 lakh crore, expected to benefit over 4 crore youth. One of the notable initiatives includes providing internships to 1 crore youth in the top 500 companies in India, with a monthly stipend of ₹5000.
Support for the Poor
The Pradhan Mantri Garib Kalyan Anna Yojana, which provides free food grains to the poor, was extended for another five years, benefiting 80 crore people. Additionally, ₹10 lakh crore was allocated for the Pradhan Mantri Awas Yojana to build over 1 crore houses in urban areas and 2 crore houses in rural areas.
Support for Farmers
The budget allocated ₹1.52 lakh crore to support farmers, with a focus on promoting natural farming practices. Furthermore, ₹2.66 lakh crore was designated for rural development to improve the living standards in villages.
Women Empowerment
A significant portion of the budget, ₹1 lakh crore, was earmarked for schemes aimed at empowering women through various initiatives and programs.
Small and Medium Enterprises (SMEs)
The Mudra loan limit was increased from ₹10 lakh to ₹20 lakh, and the Small Industries Development Bank of India (SIDBI) will open 24 new branches in major SME clusters to provide more accessible credit facilities.
Defense
Defense received the highest allocation in the budget, with ₹62,000 crore designated to enhance the capabilities of the armed forces. Additionally, a ₹1000 crore venture capital fund was announced to support startups in the defense sector.
Middle Class and Tax Reforms
The budget introduced significant tax relief for the middle class. The standard deduction was increased to ₹50,000, and the income tax slabs were revised. The new regime offers tax exemptions up to ₹3 lakh, and various other slabs were adjusted to provide more savings to taxpayers.
Price Adjustments
Several items saw a reduction in duties, making them cheaper, including leather products, mobile phone parts, and certain cancer treatment drugs. Conversely, duties were increased on ammonium nitrate, telecom equipment, and plastic products to encourage domestic manufacturing and environmental sustainability.
Regional Benefits
Bihar and Andhra Pradesh were among the states that received substantial allocations. Bihar benefited from projects worth over ₹26,000 crore, including a new airport, medical colleges, expressways, and flood relief funds. Andhra Pradesh was allotted ₹15,000 crore for the development of its new capital, Amravati, and other infrastructure projects.
Conclusion
The 2024 budget aims to balance the needs of various sectors while fostering economic growth and inclusivity. While some measures have sparked debate, particularly those affecting the stock market, the overall focus on youth employment, rural development, women empowerment, and infrastructure indicates a comprehensive approach to addressing the country’s economic challenges. The coming months will reveal the effectiveness of these measures in driving India’s progress and development.
