Finance Minister Nirmala Sitharaman’s Union Budget for 2024-25 presents a comprehensive roadmap for India’s economic development, addressing various sectors and demographics. The budget is structured around nine priority areas, demonstrating a holistic approach to national growth and development. These areas encompass agriculture, employment, and skilling, inclusive human resource development, manufacturing, and services. They also include urban development, energy security, infrastructure, innovation and R&D, and next-generation reforms.

Empowering the Youth

A standout feature of the union budget is its strong focus on youth employment and skill development. The government has allocated a substantial Rs 2 lakh crore for five new schemes targeting 4.1 crore youth over the next five years. These initiatives include a program offering one month’s wage support (up to Rs 15,000) for those joining the formal sector. It is expected to benefit 2.1 crore young people. Additionally, an ambitious internship scheme aims to provide real-world business exposure to 1 crore youth in top 500 companies over five years, offering monthly stipends and one-time assistance. The government also plans to launch three employment-linked incentive schemes. Further underlining its commitment to job creation and skill enhancement.

Revitalizing the Agriculture Sector

The agricultural sector, a cornerstone of India’s economy, receives significant attention in this budget. With an allocation of Rs 1.52 lakh crore for agriculture and allied sectors, the government aims to boost productivity and resilience. The budget outlines plans for 1 crore farmers to adopt natural farming practices within two years, a move towards sustainable agriculture. Furthermore, the introduction of 109 new crop varieties is set to diversify and potentially increase agricultural output. These measures are likely to have far-reaching effects on rural economies and food security.

Infrastructure Development and Regional Growth

Regional development is another key focus, with the introduction of the ‘Purvodaya‘ initiative for the all-around development of Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. This targeted approach to regional growth is complemented by specific allocations, such as the Rs 15,000 crore facilitation for Andhra Pradesh. These measures aim to address regional disparities and promote balanced national development.

The union budget also addresses urban development and housing needs. The announcement of three crore additional houses in rural and urban areas, backed by necessary allocations. However, it is a significant step towards addressing housing shortages and potentially boosting the construction sector. This initiative is likely to have cascading effects on various industries and employment in both rural and urban areas.

FDI Reforms

On the economic front, the Finance Minister reports that inflation remains low and is moving toward the 4 percent target, which is crucial for overall economic stability. To attract more foreign investment, the government plans to simplify FDI rules. Aiming to facilitate increased inflows, encourage prioritization, and promote rupee usage. These measures are designed to strengthen India’s position in the global economy and potentially stabilize the rupee.

Boost in the Education sector

Education receives attention through the introduction of e-vouchers for loans worth Rs 10 lakh, to be given to 1 lakh students with an interest subvention of 3 percent. This initiative aims to make higher education more accessible and affordable, potentially leading to a more skilled workforce in the future.

Tax reforms under the Union Budget

The budget also brings significant changes to the taxation landscape. There’s an increase in tax on short-term capital gains to 20 percent and long-term capital gains to 12.5 percent. In an effort to moderate enthusiasm in F&O trading, the security transaction tax (STT) on F&O has been increased. For salaried individuals, there’s some relief in the form of an increased standard deduction under the new tax regime, rising to Rs 75,000 from Rs 50,000. This change is expected to result in tax savings for many salaried individuals and pensioners.

From a macroeconomic perspective, the government has set a fiscal deficit target of 4.9% of the GDP for 2024-25. This target is lower than the 5.1 percent projected in the Interim Budget. Hence, significantly below the previous fiscal year’s revised estimate of 5.8 percent. This reduction in the fiscal deficit target signals the government’s commitment to fiscal consolidation while balancing the needs of a growing economy.

Conclusion

In conclusion, the Union Budget 2024-25 presents a multifaceted approach to India’s economic development. It aims to stimulate growth across various sectors, from agriculture and manufacturing to services and infrastructure. It also focuses on human capital development through education and skill enhancement programs. The budget’s emphasis on youth employment, agricultural reform, regional development, and fiscal management reflects a balanced strategy. It addresses both immediate needs and long-term economic goals. As these initiatives are implemented, their impact on different sectors of the economy and on the lives of citizens will become more apparent. Individuals and businesses would do well to closely analyze these budget provisions. And consider how they might affect their financial planning and operations in the coming years.

Our experts at Bonanza Wealth decode the impact of the Union Budget on your financial goals. Hence, find personalized wealth management strategies, tax-efficient investment planning, and insights on navigating the new financial landscape.