India's Economic Blueprint: Decoding the Union Budget 2024-25

The monsoon session of Parliament began on July 22, when the Economic Survey 2023–24 was introduced. On July 23, 2024, Finance Minister Nirmala Sitharaman voiced her speech on the Indian Union Budget 2024-25 in Parliament.

At 11:00 AM, Sitharaman started her statement on the Budget 2024. FM Sitharaman made her record seventh budget speech surpassing former Prime Minister Morarji Desai’s record of 6 consecutive budgets as finance minister. The first significant policy statement from the Modi government is anticipated to center on increasing spending and creating jobs, which economists predict will be excellent for the consumer goods, real estate, and car industries.

During the Monsoon Session of Parliament, Finance Minister Nirmala Sitharaman presents the first Union Budget of the Modi 3.0 government and her seventh straight one. February 1st's Interim Budget included no significant changes to policy or new perks for the middle class. Let us explore more about India’s Union budget 2024-25 with this article.

Key Highlights of India’s Union Budget 2024-25

• According to FM, India's economic development remains exceptional.
• Moving toward the 4% target for inflation: FM Sitharaman Nirmala. With the extension of PMGKAY for five years, around 80 crore individuals benefited: FM
• FM Sitharaman said five projects with a Rs 2 lakh crore national budget over five years will target 4.1 crore youth.
• Agribusiness and related industries have been approved to fund Rs 1.52 lakh crore by FM Sitharaman.
• FM said there is a 2.66 lakh crore allocation for rural development.
• The government will introduce a comprehensive program in five years to provide one crore youth with internships at prestigious companies: FM Sitharaman.
• Industrial workers will have access to rental housing in the form of dorm-style accommodations through PPP mode: FM.
• The Finance Minister Reveals Adjustments to Customs Duties on Cancer Treatment Pharmaceuticals and Medical Equipment.
• The finance minister allots ₹89,287 crore for healthcare, while the Pharma industry receives ₹2,143 crore from the PLI scheme.
• For the Shrimp industry's overall growth, Finance Minister Nirmala Sitharaman has expanded funding to include marketing and shrimp production.
• The 15% reduction in mobile phone customs duty is fantastic news for smartphone users!
• Platinum will get a 6.4% decrease in customs duty, while gold and silver will see a 6% decrease.
• FM reduces BCD for two of the essential minerals and waives customs duties on the other twenty-five.

Latest Updates on the Indian Union Budget 2024-25

FM Nirmala Sitharaman says India's inflation rate is still low and steady; concentrate on creating jobs

The finance minister states in her speech that core inflation is at 3.1% and that overall inflation in India is still low, steady, and approaching the 4% target. Core inflation is calculated by deducting the cost of food and gasoline. She also mentions five programs designed to help people find work, one of which is skill-building for 4.1 crore young people with a 2 lakh crore budget. 

The middle class, SMEs, employment, and skill development are all prioritized. Rs 1.48 lakh crore has been set aside for employment, skill development, and education. FM lays up a plan to follow nine priorities for the potential in India. A thorough plan outlining nine goals to be pursued to create chances for India FM. These 9 priorities are:

• Agriculture
• Employment
• Inclusive development
• Mfg. and Services
• Urban Development
• Energy
• Infrastructure
• Innovation, R&D
• NexGen reforms

Three Schemes for employment-related incentives

A: One month's wage for freshers

B: Job creation in manufacturing

C: Support to employers

FM Nirmala Sitharaman Speaking of the agribusiness

The Union Budget places a strong emphasis on the agriculture sector. FM According to Sitharaman, over the next few years, 1 crore farmers will be introduced to natural farming. The government intends to enhance the production, storage, and selling of oilseeds and pulses to promote self-sufficiency. She also mentions working with states to support farmers in implementing digital public infrastructure. In essence, DPI is a collection of technological building blocks that, when governed in an open, transparent, and participatory manner, promote competition, innovation, and inclusivity at a scale. The Center will help the state governments implement Agri-DPI by collaborating with them.

Why the agribusiness industry is important to the Digital Public Infrastructure

Beginning with the current Khareef season, Finance Minister Nirmala Sitharaman declared that a digitized crop survey including 6 crore farmers across 400 districts will be carried out. The announcement is important because it will update the system for estimating crop area and productivity. The Center had requested last year that States and Union Territories (UTs) use the survey to automate or digitize the area enumeration/Girdawari of crops at the field level. A 12-state trial initiative was implemented.

Announcements are made by Nirmala Sitharaman for MSMEs and manufacturing

The FM declared that the government would introduce a comprehensive program that would give one crore youths a 12-month internship opportunity in the top 500 corporations. In recognition of the various challenges the industry faces, there will be several procedures in place to help Micro, Small, and Medium-Sized Enterprises (MSMEs) in distress continue receiving credit. Over 110 million people are employed by MSMEs in both rural and urban areas in India, where they account for roughly 30% of the country's GDP and 48% of export earnings.

Capex is maintained by FM at Rs 11.11 lakh crore or 3.4% of GDP

• In the first Union Budget of the third Narendra Modi government, Finance Minister Nirmala Sitharaman on July 23 maintained India's FY25 capital expenditure budget at Rs 11.11 lakh crore, the same amount as allocated in February. 
• This is more than the revised estimate of Rs 9.5 lakh crore from the previous year.
• In the end, the government will spend 3.4 percent of the budget on capital expenditures (capex), which is nearly twice as much as it did five years ago (3.2% in the prior year).
• Capex growth has been in double digits for six of the past seven years, and it is probably going to taper down from the 24.8 percent rise in FY23 and the 28.4 percent growth in FY24.

Announcements regarding research on small modular nuclear reactors are made by FM Sitharaman

The government has set aside money for joint private-public research and development on small modular nuclear reactors (SMRs). It has also promised to promote thermal power facilities that are Advanced Ultra Supercritical (AUSC). Utilizing AUSC technology, a joint venture between NTPC Ltd and Bharat Heavy Electricals Ltd plans to commission an 800 MW commercial facility. Comparing this innovative method to traditional coal-fired facilities, lesser emissions and more efficiency are promised. A policy for developing pumped hydro storage is being considered, according to the finance minister. One technique for large-scale energy storage that can assist regulate grid swings is pumped hydro.

The Vision and Strategy Document for the Financial Sector was released

The government will release the Financial Sector Vision and Strategy Document to prepare the sector in terms of scale, capacity, and skills to satisfy the financial demands of the economy. This will direct the efforts of the government, regulators, financial firms, and traders and establish the agenda for the following 5 years.

Why is the announcement of the Pradhan Mantri Awas Yojana-Urban 2.0 done?

Under the Pradhan Mantri Awas Yojana-Urban 2.0, Finance Minister Nirmala Sitharaman proposed an investment of Rs. 10 lakh crores, of which Rs. 2.2 lakh crore would be provided by the Central government over five years, for the construction of one crore dwellings in cities. In the first meeting of the third term, the Cabinet sanctioned one crore new dwellings, even though PMAY-U is scheduled to expire on December 31 of this year. The finance minister additionally declared funds for interest subsidy for low-cost housing, a move that Prime Minister Narendra Modi had made in his 2023 Independence Day speech.

The customs duty on platinum drops to 6.4%, while on gold and silver drops to 6%

The goal is to increase domestic value addition in jewelry made of gold and precious metals by lowering the customs tariff on gold and silver to 6% and on platinum to 6.4%. To reduce litigation and make the Income Tax Act more readable and simpler, the FM also announced a "comprehensive review" of the law. It will take six months to finish this.

Why did the government declare that the long-term capital gains tax would increase?

An increase in Long Term Capital Gains tax from 10% to 12.5% has been announced to improve revenue generation. The move is probably due to the recent increase in equities investments and profits booked by investors. Additionally, a 20 percent rise in the short-term capital gains tax on specific assets is planned.

Great news for phone purchasers!

The 15% basic customs duty (BCD) on mobile phones and mobile chargers has been cut. This was a major announcement made by Finance Minister Nirmala Sitharaman for mobile phone enthusiasts.

Government's Financial Boost for Shrimp Farming Industry

Finance Minister Nirmala Sitharaman pledged help for shrimp aquaculture through NABARD in her seventh Union Budget on Tuesday. Support for shrimp farming: The government will give money for marketing and shrimp farming initiatives.

For cancer patients, three medications are completely free from customs duties

In 2022–2023, we lowered the total amount of customs duty rates. The FM stated to rationalize them after a review over the next six months. She declared that three more medications would be completely free from customs duties to help cancer patients. To support the manufacturing of domestic X-ray equipment, I suggest modifying the basic customs tariff on X-ray tubes and flat panel detectors.

Space Economy Announcements

To boost the space economy and achieve her aim of a five-fold increase in the industry within the next ten years, FM Nirmala Sitharaman has announced the establishment of a venture capital fund worth Rs 1,000 crore. The government has been striving to support the space businesses with science and policy in the four years since the sector was opened up. This is probably the first time money will be given out. Despite being one of the top spacefaring nations, India only accounts for about 2 percent of the global space business.

• A boost of Rs 1,000 crore for the space economy!
• The space economy grew five times over the ensuing ten years.
• An announcement of Rs 1,000 crore to boost the space sector.

Modifications to the income tax slabs and basic deduction suggested in FM Sitharaman's speech

It has been suggested to increase the family pension deduction from Rs 15,000 to Rs 25,000 and the standard deduction from Rs 50,000 to Rs 75,000. The FM adjusted the direct tax slabs underneath the new tax regime which may enable taxpayers to realize a net gain of about Rs 17,500 annually.

Conclusion

India's Union Budget 2024-25 performs a crucial position in shaping the nation's monetary trajectory for the approaching fiscal year. By focusing on key areas together with monetary growth, healthcare, infrastructure improvement, and social welfare packages, the authorities aim to create an extra-inclusive and rich society. However, the achievement of the budget will in the end depend upon the effective implementation and monitoring of the proposed measures. In addition, the market anticipates that by continuing on the fiscal glide path, the deficit will drop to 4.5% of GDP by 2025–2026.

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