The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, lays out a strategic blueprint for India’s growth and development. This budget focuses on improving infrastructure, maintaining fiscal discipline, and simplifying taxes to ensure sustainable growth. Here is a detailed, easy-to-understand breakdown of the key highlights and changes introduced in the Union Budget 2024-25.
Capital Expenditure and Infrastructure
One of the most significant aspects of this budget is the substantial increase in capital expenditure, with a 33% hike bringing the total to ₹10 lakh crore. This means more money will be spent on building roads, bridges, and other infrastructure. This increase is expected to create jobs and boost economic growth. Better infrastructure makes it easier for businesses to operate and for people to travel and transport goods. Previous budgets allocated less for capital expenditure, which slowed down infrastructure development. The new allocation marks a significant step up, promising to accelerate the pace of development and connectivity across the country.
Fiscal Deficit Reduction
A notable aspect of this budget is the commitment to fiscal consolidation. The government has set a target to reduce the fiscal deficit to 5.9% of GDP for FY 2024-25, with a long-term goal of bringing it below 4.5% by FY 2025-26. Reducing the fiscal deficit helps in managing the country’s debt and maintaining economic stability. In previous years, the fiscal deficit was higher, posing a risk to economic stability. The new target shows a commitment to better financial management, balancing support for growth with the need for fiscal discipline.
Tax Reforms: Simplifying and Relieving
One of the most anticipated elements of the budget is the overhaul of income tax slabs under the new tax regime. The basic exemption limit has been raised from ₹2.5 lakh to ₹3 lakh, and the rebate under Section 87A of Income Tax Act, 1961 has been increased, making income up to ₹7 lakh tax-free under the new regime. These changes simplify the tax structure and reduce the tax burden on individuals, leaving them with more disposable income. Previously, the basic exemption limit was lower, and fewer people benefited from tax rebates. The new changes aim to make the tax system more straightforward and beneficial.
The standard deduction for salaried individuals has also been increased to ₹52,500 under the new regime. This change provides additional relief to taxpayers, allowing them to keep more of their earnings. Earlier, the standard deduction was lower, offering less relief to salaried individuals. The new amount helps in reducing taxable income further, making the tax regime more favourable for taxpayers.
Boosting Agriculture and Rural Development
The budget allocates substantial resources to the agriculture sector, focusing on enhancing farm productivity and farmer incomes. Key initiatives include the establishment of an Agriculture Accelerator Fund to encourage agri-tech start-ups led by young entrepreneurs. This fund aims to foster innovation and modernize agricultural practices. Investment in rural infrastructure, particularly in irrigation projects and rural roads, is another significant highlight. These investments are expected to transform the rural landscape, improving connectivity and enabling better access to markets and services.
Earlier budgets had less focus on technological innovation in agriculture. The new fund aims to modernize farming practices and improve rural connectivity. This shift is expected to make agriculture more profitable and sustainable, ensuring a better livelihood for farmers and enhancing rural development.
Health and Education: Investing in the Future
With an allocation of ₹2.23 lakh crore, the budget underscores the importance of health and wellness. Key initiatives include the National Health Mission and the Ayushman Bharat scheme, which aim to enhance healthcare accessibility and quality. This funding is intended to improve healthcare services and make them accessible to more people, enhancing overall public health. Previous allocations were lower, limiting the reach and effectiveness of health programs. The new budget aims to expand and enhance these services.
The education sector also receives a boost with ₹1.12 lakh crore earmarked for improvements in school and higher education. The focus is on enhancing digital infrastructure, improving the quality of education, and promoting skill development. Initiatives such as the establishment of new digital universities and the expansion of existing ones are expected to prepare the youth for future challenges. Earlier budgets had lesser emphasis on digital education and skill development. The new allocation aims to bridge this gap, ensuring that future generations are well-equipped with necessary skills and knowledge.
Advancing the Digital Economy and Fintech
The government continues to champion digital payments and fintech innovation, allocating ₹1,500 crore for the promotion of digital transactions. This initiative aims to integrate digital payments into everyday life, fostering a cashless economy and enhancing financial inclusion. Measures to strengthen cybersecurity and data protection in the financial sector were also highlighted. These measures are crucial in building trust and ensuring the security of digital financial transactions. Digital transactions were growing but lacked the extensive support now provided. Enhanced cybersecurity measures are a new focus to protect financial data, ensuring that the digital economy remains secure and robust.
Fostering Research and Development
Recognizing the importance of innovation, the budget increases funding for research institutions and innovation hubs. Collaborative projects between academia and industry are encouraged to drive technological advancements and maintain India’s competitive edge. The budget also emphasizes the need for investment in emerging technologies such as artificial intelligence, robotics, and biotechnology. Previous budgets provided less emphasis on R&D. The new focus aims to drive progress in these cutting-edge fields, ensuring that India remains at the forefront of global technological advancements.
Green Energy and Sustainability
A major push towards green energy is evident with a proposed outlay of ₹35,000 crore for energy transition and net-zero objectives. The National Green Hydrogen Mission, allocated ₹19,700 crore, aims to position India as a global hub for green hydrogen production. These initiatives support environmental sustainability and reduce reliance on fossil fuels, promoting cleaner energy sources. Previous budgets had less focus on green energy. The new initiatives mark a significant shift towards sustainability, ensuring that India contributes to global efforts to combat climate change.
Sector-Specific Highlights
The railways sector receives ₹2.40 lakh crore for modernization and expansion, focusing on the development of high-speed rail corridors, the introduction of new trains, and the improvement of railway infrastructure. These initiatives are expected to enhance connectivity and improve the overall efficiency of the rail network. Previous investments were lower, slowing down modernization. The new allocation aims to revamp the railways significantly, ensuring that the rail network meets the demands of a growing economy.
Defense spending has been increased by 13% to ₹5.94 lakh crore, underscoring the importance of modernization and preparedness. The budget emphasizes the need for advanced technology and equipment, as well as the development of indigenous defense capabilities. This increased allocation aims at ensuring national security and enhancing defense capabilities. Defense spending was adequate but needed an increase for modernization. The new budget addresses this need, ensuring that the armed forces are well-equipped to handle modern threats.
The MSME (Micro, Small, and Medium Enterprises) sector receives a boost with a revamped Credit Guarantee Scheme, providing an additional ₹2 lakh crore in collateral-free credit. This initiative aims to support small businesses and entrepreneurs, facilitating access to finance and promoting economic growth. The budget also includes measures to simplify compliance and reduce the regulatory burden on MSMEs. Earlier, access to finance and compliance were more challenging for MSMEs. The new scheme aims to make it easier for small businesses to thrive, fostering entrepreneurship and innovation.
Start-up’s will benefit from tax incentives, including the extension of the eligibility period for claiming tax holidays by one more year. This initiative aims to foster innovation and entrepreneurship, providing start-ups with the support they need to grow and succeed. The budget also includes measures to improve access to finance and promote the development of start-up ecosystems. Support for start-ups was growing but needed further incentives. The new budget provides these necessary boosts, ensuring that the start-up ecosystem continues to flourish.
Conclusion
The Union Budget 2024-25 represents a balanced and forward-looking approach, emphasizing growth, fiscal responsibility, and inclusivity. With a strong focus on infrastructure, health, education, and green energy, the budget aims to create a sustainable and prosperous future for India. The tax reforms are designed to simplify compliance and provide relief to taxpayers, potentially boosting disposable incomes and consumption.
This budget sets a solid foundation for India’s economic trajectory, steering the nation towards a brighter and more prosperous future. By investing in key sectors and promoting innovation, the government aims to drive long-term economic growth and development. The emphasis on fiscal consolidation ensures that this growth is sustainable, providing a stable and secure economic environment for all.
In summary, the Union Budget 2024-25 reflects the government’s commitment to building a stronger, more resilient economy. It addresses the immediate needs of various sectors while laying the groundwork for future growth and development. Through strategic investments and comprehensive reforms, the budget aims to create a more inclusive and prosperous India, ensuring that all citizens benefit from the nation’s economic progress.
Contributed by- Rudraksh Gupta
O.P. Jindal Global University