On July 23, 2024, Finance Minister Nirmala Sitharaman presented her seventh Union Budget, outlining a comprehensive plan for India’s economic future. This article breaks down the key highlights and implications of Budget 2024-25.
The Big Picture: Fiscal Targets and Economic Outlook
Finance Minister Sitharaman set the tone with a focus on fiscal prudence and economic growth:
- Fiscal deficit target: 4.9% of GDP
- Net tax receipts estimate: ₹25.83 lakh crore
- Commitment to reduce deficit below 4.5% of GDP by 2025-26
The Minister noted that India’s economic growth continues to shine amidst global uncertainty, with inflation moving towards the 4% target and core inflation at 3.1%.
Employment and Skill Development: A Major Focus
The Budget places significant emphasis on job creation and skill enhancement:
| Initiative | Allocation/Target |
|---|---|
| Employment generation | ₹2 lakh crore for 4.1 crore youth over 5 years |
| Skill development | ₹1.48 crore allocation |
| Industrial Training Institutes | 1,000 to be upgraded |
| Youth skilling | 20 lakh youth over 5 years |
Tax Reforms: Simplification and Relief
Personal Income Tax Changes
- Standard deduction increased from ₹50,000 to ₹75,000 under new tax regime
- Potential annual savings of up to ₹17,500 for taxpayers
Capital Gains Tax Simplification
- Short-term gains on some financial assets to attract 20% tax
- Exemption limit increased to ₹1.25 lakh for lower and middle-income classes
Infrastructure and Urban Development
The government continues its focus on infrastructure with a massive allocation:
- Capex allocation: ₹11,11,111 crore (3.4% of GDP)
- Urban development initiatives:
- 3 crore additional houses under PM Awas Yojana
- Water supply, sewage treatment, and solid waste management projects in 100 large cities
Agricultural Reforms and Rural Development
| Initiative | Details |
|---|---|
| Rural development allocation | ₹2.66 lakh crore |
| Climate-resilient crop varieties | 109 new varieties to be released |
| Natural farming promotion | 1 crore farmers over 2 years |
| Bio-input resource centers | 10,000 to be established |
Boosting the Startup Ecosystem
In a significant move for startups and investors, the Finance Minister proposed abolishing the Angel Tax for all classes of investors.
Space Economy Expansion
- Target: 5x growth in 10 years
- Venture capital fund: ₹1,000 crore to be set up
Stock Market Reaction
The budget announcement led to volatility in the stock markets:
- Sensex: Dropped 1,266.17 points to 79,235.91
- Nifty: Tumbled 435.05 points to 24,074.20
This reaction was primarily due to the proposed hike in Securities Transaction Tax on Futures and Options contracts.
Regional Development Initiatives
While no special packages were announced, the budget included:
- Backward region grant for 3 districts of Andhra Pradesh
- Financial assistance for Bihar through multilateral development agencies
- ‘Purvodaya’ plan for eastern states’ development
Conclusion: Paving the Way for Viksit Bharat
Budget 2024-25 sets an ambitious roadmap for India’s development, focusing on employment, infrastructure, and inclusive growth. As the nation embarks on this journey towards becoming a developed economy, the effectiveness of these measures will be closely watched in the coming months and years.
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