[Yojana September 2024 Summary] Union Budget 2024-25- Explained Pointwise

The Union Budget 2024-25 lays out a comprehensive roadmap for the growth and development of the agriculture, manufacturing and services sectors, by recognising their pivotal role in driving economic growth and employment. The budget is focused on four major groups: Garib (poor), Mahilayein (women), Yuva (youth) and
Annadata (farmers). The Union Budget 2024–25 charts a promising course for lndia’s economic growth, emphasising manufacturing, services, and digital technologies.

What are the Macro-economic highlights of the Budget 2024-25?

Budget Estimates 2024-25

Total Receipts for FY 2024-25-

The total receipts other than borrowings for the year 2024-25, is estimated to be at Rs. 32.07 lakh crore.

The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs.14.01 lakh crore and Rs. 11.63 lakh crore respectively. Both will be less than that in 2023-24.

The net tax receipts are estimated at Rs. 25.83 lakh crore.

Total Expenditure for FY 2024-25- The total expenditure is estimated at Rs. 48.21 lakh crore.

Fiscal Deficit- The fiscal deficit is estimated at 4.9 per cent of GDP.

Inflation Target- India’s inflation continues to be low, stable and moving towards the 4 per cent target. Core inflation (nonfood, non-fuel) currently is 3.1 per cent.

India’s Growth on a robust path
India’s economic growth continues to be the shining exception and will remain so in the years ahead.

What are the 9 priority areas and Related Policy Annoucements for the achievement of Viksit Bharat in the Budget 2024-25?

Priority 1: Productivity and resilience in Agriculture

a. Transformation of agriculture research- Focus on raising productivity and developing climate resilient varieties. Provision for funding for agricultural research in challenge mode, including the private sector.

b. Release of new varieties- Release of new 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops for cultivation by farmers.

c. Natural Farming- Initiation of 1 crore farmers across the country into natural farming supported by certification and branding, in the next two years.

d. Missions for pulses and oilseeds- Launch of a mission for achieving ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.

e. Digital Public Infrastructure (DPI) for Agriculture- The use of DPI in agriculture for coverage of farmers and their lands in 3 years. Details of 6 crore farmers and their lands to be brought into the farmer and land registries. Enabling the Issuance of Jan Samarth based Kisan Credit Cards in 5 states.

f. Shrimp Production & Export- Financial support for setting up a network of Nucleus Breeding Centres for Shrimp Broodstocks. Facilitation of finance for shrimp farming, processing and export through NABARD.

g. National Cooperation Policy- Formulation of a National Cooperation Policy for systematic, orderly and all-round development of the cooperative sector.

Priority 2- Employment & Skilling

a. Employment Linked Incentive- 3 schemes for ‘Employment Linked Incentive’, to be launched as part of the Prime Minister’s package.

Scheme A: First Timers- This scheme is to be launched to provide one-month wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month salary in 3 instalments to first-time employees, as registered in the EPFO. The support will be upto Rs. 15,000. The eligibility limit will be a salary of Rs. 1 lakh per month. The scheme is expected to benefit 210 lakh youth.

Scheme B: Job Creation in manufacturing- An incentive to be provided at specified scale directly both to the employee and the employer, with respect to their EPFO contribution in the first 4 years of employment. The scheme is expected to benefit 30 lakh youth entering employment, and their employers.

Scheme C: Support to employers- This employer-focused scheme will cover additional employment in all sectors. All additional employment within a salary of Rs.1 lakh per month will be counted. The government will reimburse to employers up to Rs. 3,000 per month for 2 years towards their EPFO contribution for each additional employee. The scheme is expected to incentivize additional employment of 50 lakh persons.

b. Participation of women in the workforce- Facilitation of higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishment of creches.

c. Skilling programme- A new centrally sponsored scheme to be launched to skill 20 lakh youth over a 5-year period. 1,000 Industrial Training Institutes to be upgraded in hub and spoke arrangements with outcome orientation.

d. Skilling Loans- The Model Skill Loan Scheme to be revised to facilitate loans up to Rs. 7.5 lakh with a guarantee from a government promoted Fund. This measure is expected to help 25,000 students every year.

e. Education Loans- Financial support for loans upto Rs. 10 lakh for higher education in domestic institutions. E-vouchers for this purpose to be given directly to 1 lakh students every year for annual interest subvention of 3 per cent of the loan amount.

 Priority 3: Inclusive Human Resource Development and Social Justice

a. Saturation approach- Saturation approach to be employed for covering all eligible people through various programmes.

b. Purvodaya- A plan, Purvodaya, for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh to be launched. This will cover human resource development, infrastructure, and generation of economic opportunities to make the region an engine to attain Viksit Bharat.

c. The announcements related to Bihar– Industrial node at Gaya, connectivity projects, such as (1) Patna-Purnea Expressway, (2) Buxar-Bhagalpur Expressway, (3) Bodhgaya, Rajgir, Vaishali and Darbhanga spurs, and (4) additional 2-lane bridge over river Ganga at Buxar at a total cost of Rs. 26,000 crore.

d. The announcements Related to Andhra Pradesh- Reiteration of the firm commitment to Andhra Pradesh Reorganization Act provisions. Rs. 15,000 crores to be arranged in the current financial year, with additional amounts in future years. Financing and early completion of the Polavaram Irrigation Project and Grants for backward regions of Rayalaseema, Prakasam and North Coastal Andhra.

e. PM Awas Yojana- Three crore additional houses under the PM Awas Yojana in rural and urban areas in the country.

f. Women-led development- An allocation of more than Rs. 3 lakh crores for schemes benefitting women and girls and promoting women-led development

g. Pradhan Mantri Janjatiya Unnat Gram Abhiyan- The abhiyan aims to improve the socio-economic condition of tribal communities, by adopting saturation coverage for tribal families in tribal-majority villages and aspirational districts. This will cover 63,000 villages benefitting 5 crore tribal people.

h. Bank branches in North-Eastern Region- More than 100 branches of India Post Payment Bank to be set up in the North East region to expand the banking services.

Priority 4: Manufacturing & Services

a. Support for promotion of MSMEs– The following initiatives have been announced as part of the Budget-
Credit Guarantee Scheme for MSMEs in the Manufacturing Sector without collateral or third-party guarantee
b. Public sector banks to build their in-house loan assessment model MSMEs for credit
c. Credit Support to MSMEs during Stress Period through a guarantee from a government promoted fund.
d. Enhanced Mudra Loan limits, from 10 lakhs to 20 lakhs, for MSME entrepreneurs who have repaid loans under Tarun category
e. Turnover threshold of buyers for mandatory onboarding on the TReDS platform reduced to Rs. 250 crores from Rs. 500 crores
f. Establishment of SIDBI branches in MSME clusters
g. Establishment of 50 MSME Units for Food Irradiation, Quality & Safety Testing.

b. Internship in Top Companies- A comprehensive scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years. An internship allowance of Rs. 5,000 per month along with one-time assistance of Rs. 6,000 to be provided. Companies to bear the training cost and 10 per cent of the internship cost from their CSR funds.

c. Industrial Parks- Development of investment-ready “plug and play” industrial parks with complete infrastructure in or near 100 cities. Sanctioning of twelve industrial parks under the National Industrial Corridor Development Programme.

d. Rental Housing- Rental housing with dormitory type accommodation for industrial workers to be facilitated in PPP mode with VGF support and commitment from anchor industries.

e. Critical Mineral Mission- Launch of Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets.

f. Digital Public Infrastructure Applications- Use of DPI applications at population scale for productivity gains, business opportunities, and innovation by the private sector. These are planned in credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.

g. Debt recovery and IBC- Steps for reforming and strengthening debt recovery tribunals to be taken. Additional tribunals to be established. Out of those, some will be notified to decide cases exclusively under the Companies Act.

h. Voluntary closure of LLPs- The services of the Centre for Processing Accelerated Corporate Exit (C-PACE) to be extended for voluntary closure of LLPs to reduce the closure time.

Priority 5- Urban Development

a. Cities as Growth Hubs and Creative redevelopment of cities- Policies to be formulated for the achievement of both these initiatives.

b. Transit Oriented Development- Transit Oriented Development plans for 14 large cities with a population above 30 lakhs to be formulated.

c. Urban Housing- Housing needs of 1 crore urban poor and middle-class families to be addressed with an investment of ₹ 10 lakh crore, under the PM Awas Yojana Urban 2.0. Central assistance of ₹ 2.2 lakh crore to be provided in the next 5 years.

d. Water Supply and Sanitation- Pomotion of water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects in partnership with the State Governments and Multilateral Development Banks.

e. Street Markets- The development of 100 weekly ‘haats’ or street food hubs in select cities.

f. Stamp Duty- The states to be encouraged to consider further lowering duties for properties purchased by women.

Priority 6- Energy Security

a. Launch of Initiatives with private sector Collaboration in Nuclear Energy- Setting up Bharat Small Reactors and R&D of Bharat Small Modular Reactor and newer technologies for nuclear energy.

b. PM Surya Ghar Muft Bijli Yojana- Steps to be taken for encouragement of PM Surya Ghar Muft Bijli Yojana to install rooftop solar plants to enable 1 crore households obtain free electricity up to 300 units every month.

c. Pumped Storage Policy- A policy for promotion of pumped storage projects to be brought out for electricity storage.

d. Advanced Ultra Super Critical Thermal Power Plants- A joint venture between NTPC and BHEL to set up a full scale 800 MW commercial plant using Advanced Ultra Super Critical Thermal Power Plants (AUSC) technology.

e. Roadmap for ‘hard to abate’ industries- Appropriate regulations for transition of these industries from the current ‘Perform, Achieve and Trade’ mode to ‘Indian Carbon Market’ mode to be put in place.

f. Support to traditional micro and small industries- An investment-grade energy audit of traditional micro and small industries in 60 clusters, including brass and ceramic, to be facilitated. The scheme to be replicated in another 100 clusters in the next phase.

Priority 7- Infrastructure

a. Infrastructure provisions- Provision of ₹11,11,111 crore for infrastructure (3.4% of GDP) for capital expenditure. Provision of ₹1.5 lakh crore to states as llong-terminterest free loans to support resource allocation.

b. Pradhan Mantri Gram Sadak Yojana (PMGSY)- Phase IV of PMGSY to be launched to provide all-weather connectivity to 25,000 rural habitations, which have become eligible in view of their population increase.

c. Irrigation and Flood Mitigation- Financial support of ₹11,500 crore for projects such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes.

d. Tourism- Support for the comprehensive development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor modelled on the successful Kashi Vishwanath Temple Corridor.

Priority 8- Innovation, Research & Development

a. Anusandhan National Research Fund- Operationalization of the Anusandhan National Research Fund for basic research and prototype development.

b. Private Sector Driven Research- Private sector-driven research and innovation at commercial scale with a financing pool of ₹1 lakh crore.

c. Space Economy- A venture capital fund of ₹1,000 crore to be set up for the development of space economy.

Priority 9- Next Generation Reforms

a. Economic Policy Framework- Formulation of an Economic Policy Framework for Improving productivity of factors of production. Facilitating markets and sectors to become more efficient.

b. Rural & Urban land related actions- Efforts will be taken for Rural and Urban Land mapping, such as
Assignment of Unique Land Parcel Identification Number or Bhu-Aadhaar for all lands, Digitization of cadastral maps and GIS mapping of Urban lands, Establishment of land registry and linkage to the farmers registry.

c. NPS Vatsalya- It is an investment plan for contribution by parents and guardians, for minors. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.

d. Ease of Doing Business- Drafting of Jan Vishwas Bill 2.0 for enhancement of ‘Ease of Doing Business’. States to be incentivized for implementation of their Business Reforms Action Plans and digitalization.

e. Taxonomy for climate finance- Enhancement of the availability of capital for climate adaptation and mitigation related investments.

f. New Pension Scheme (NPS)- A solution to be evolved to address the relevant issues in the New Pension Scheme (NPS) while maintaining fiscal prudence to protect the common citizens.

What have been the Tax Related Announcements in Budget 2024-25?

Indirect Tax Proposals

a. Rationalisation of GST Tax Structure- The GST Tax structure to be further simplified and rationalized to multiply the benefits of GST.

b. Sector Specific Customs Duty Proposals- Comprehensive review of the custom duty rate structure undertaken for ease of trade, removal of duty inversion and reduction of disputes.

Direct Tax Proposals

a. Review of the Income Tax Act 1961- Simplification of Charities, TDS. This will reduce the compliance burden, promote entrepreneurial spirit and provide tax relief to citizens.

b. Rationalisation of Capital Tax-
a. Short Term Capital Gains Tax- Short term gains of financial assets to attract 20% tax rate.
b. Long Term Capital Gains Tax- Long term gains on all financial non-financial assets to attract a tax rate of 12.5%.
c. Exemptions limit increase- Increase in exemption limits in capital gains on financial assets to ₹1.25 lakh per year.

Abolition of Angel Tax- ANGEL tax abolished for all classes of investors

Reduction in corporate Tax for foreign companies- Corporate tax rate on foreign companies reduced from 40% to 35%.

Personal Income tax

a. Standard Deduction for salaried employees increased from ₹50,000 to ₹75,000
b. Deduction on family pension for pensioners increased from ₹15,000 to ₹25,000

Revision of Tax rate Structure in New Tax Regime

What are the positives of the Budget 2024-25?

1. Delivering on the rising aspirations of the Youth- The incentives have been provided to first time employees and employers with an outlay of ₹10,000 crore. Further there has been incentivization of internships with an outlay of ₹2,000 crore and emphasis on Skill development with state government’s cooperation (Model Skill Loan Scheme).

These steps taken in the Budget 2024-25, deliver on the the rising aspirations of the Youth as recommended by the Economic Survey 2024-25.

2. Concerted Bid to address the Challenges Faced By MSMEs- The steps taken in the Budget 2024-25 like Credit Guarantee Scheme, New assessment model, Credit Support during Stress Period, are attempts to address the financial and working capital challenges faced by the MSMEs.

3. Tax relief for the salaried class- The standard deduction has been raised and the tax slabs with their relevant tax rates have been revised in the Budget 2024-25. This will leave a little more money in the hands of the salaried class, post taxes. Pensioners are also set to benefit by a marginal increase of ₹10,000 in the deduction allowed on family pensions.

4. Sticking to the Fiscal Consolidation Plan- Budget for 2024-25 sticks to the government’s fiscal consolidation path, with the Fiscal Deficit proposed to be pared to 4.9% of GDP.

This increases the possibility of a sovereign rating upgrade of domestic bonds have embarked on a maiden journey of getting included in global bond indices. The Budget unveils the unequivocal focus on fiscal stability and continuity of sustainable growth impulses.

5. Support to the Annadata (Farmers)- The promotion of Atmanirbharta in pulses and oilseeds, focus on agriculture research (bearing in mind the realities of climate change), large-scale clusters for vegetable production, and Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands, are all likely measures to support the Annadata (i.e., farmer).

A thriving agriculture sector will allow the government to deliver on its promise of food grains under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which has now been extended for five years.

6. Push towards Housing for all- The outlay for Pradhan Mantri Awas Yojana (PMAY)- Urban and Rural has seen a massive jump of 37% and 70% respectively. The Budget reaffirms that housing for all remains a key hallmark of the government.

7. Boost to PLI Scheme for Atmanirbhar Bharat- The outlay on Production Linked Incentive (PLI) was increased by 75% in the Budget for FY25. This increase accompanied by tweaks to sectoral custom duties is a bid to support domestic manufacturing and deepen local value addition.

What are the concerns with the Budget 2024-25?

1. Cuts in the Social Sector Schemes- The Budget has cut the share of Social sector schemes outlays which includes school and higher education. The outlay for the rural job guarantee scheme- MGNREGA is at a nine-year low share of 1.78% of overall outlay.

2. Reduction in schemes for Minorities- The Budget has seen a reduction in the budget for education schemes for Madrasas and Minorities from ₹10 crore to ₹2 crore in 2024-25.

3. Removal of Indexation- The removal of indexation for calculating the value of the Long term asset (Real estate), is being viewed as an additional tax burden for the real estate property dealers.

4. No announcement on Indian Railways- The country’s largest employer, the Indian Railways, was a glaring absence in the Budget speech of the Finance Minister. There were no announcements on the Railway sector which continues to suffer from low freight and passenger capacity, low staff and manpower and safety issues.

5. No announcement regarding the indirect tax system of MSMEs- The budget has failed to address the demands of MSMEs for simplification and rationalization of the GST regime.

6. Obsession with fiscal consolidation- Some critics hold that government’s obsession with fiscal consolidation, which is visible in its bid to reduce the fiscal deficit to 4.9% of GDP in 2024-25 from 5.1% in the interim budget, may constrain government spending.

7. Lack of a clear economic strategy or vision to tackle the economic slowdown- Critics have also pointed that the budget lacks the clear economic strategy and vision to tackle the slowdown in aggregate demand, private investment, exports and the resulting jobs crisis. The measures announced, like employment-linked incentives, seem too small to have a meaningful impact.