Budget 2024: An analysis

The Union Budget of 2024-25 enunciates a clear and realistic road map for the future of India focusing on specific sectors for investment and reform for a new India. Regarding productivity and food security in agriculture, the budget is majorly concerned with sustainable production practices, crop and livestock diversification, digital technology in agriculture, and expanding fisheries business. Besides, large investments in employment and skilling initiatives are planned to build an efficient workforce and adequate jobs. It also focuses on policies that address MSMEs, human capital development, and social inclusion, in addition to emphasizing investment, research, and development. Development of Infrastructure, Energy Security, and Next Gen Reforms are also laid as pillars of this budget. In this analysis, the various implemented or proposed reforms and fiscal policies are discussed and assessed concerning prospects for the Indian growth path.

The Government  has prioritized the following sectors in the budget for the financial year 2024-25:

Productivity and Resilience in Agriculture

Research and Development 

The Government also seeks to transform agricultural research to revolutionize production, producing seeds that are resistant to climatic change. This embraces the area of plant breeding to come up with improved varieties in line with the environment of the various regions and other emerging issues in agriculture. 

Sustainable Farming Practices 

A major drive for natural farming is expected in the country; the plan is to educate one crore farmers about such techniques. Which is hoped to decrease the usage of chemical fertilizers, enhance the quality of the soil, and ensure sustainability. To facilitate this change, bio-input resource centers will be set up. 

Diversification of crops grown and extension of value-added activities. 

India wants to achieve its target of self-sufficiency in pulses and oilseeds to cut import bills and give a boost to farmer’s income. In the same regard, clusters in vegetable production will be supported to improve the production, processing, and marketing of these important crops by the Government. 

Digital Agriculture 

The Government will adopt plans for modernizing agriculture through the Digital Public Infrastructure. It shall therefore help farmers to obtain timely information, markets among other things, and credit facilities, it targets to enhance efficiency and profitability. 

Fisheries 

To further enhance the productivity of aquaculture, the Government through NABARD will invest in shrimp farming that will in turn expand exports and growth in the fisheries sector. 

These seemingly contradictory measures, when taken together, are part of the Government’s strategy to alter the face of Indian agriculture to increase productivity, sustainability, and resilience in the sector for the farmer as well as the consumer. 

Employment & Skilling 

The Government envisages employment and skilling missions to develop a skilled force and to yield sufficient jobs for the country’s youths. Key strategies include:

• Youth Employment and Skilling: It has been seen that a large part of the budget is spent on programs that would help in the skill development and employment of youths. Such measures include; vocational education and training, apprenticeship as well and employment incentives. The rationale for the intervention is aimed at preparing young people for employment and the enhancement of the economic development of the country. 

• Skill Development: The Government is focusing on improving different skill development schemes so that they can match the needs of the industries. This includes the enhancement of training standards, the growth of skills development programs, and the support of the culture of job creation among the skilled youths. 

• Women's Workforce Participation: New initiatives are underway that can lead to the employability of women as they are obtaining skill development provisions and a suitable working environment. 

• Infrastructure Development: Expending on infrastructure also holds promises of creating employment opportunities in sectors of the economy. 

• Support for MSMEs: MSMEs are established to be employing a large number of people or families. The Government is targeting to assist MSMEs to expand and generate employment opportunities for the citizens. 

MSME accounts for a majority of employment and is contributing a major portion towards the Indian economy. The Government has seen the need for entrepreneurship and has come up with several measures to encourage its operations. 

Key areas of support include:

• Credit Facilitation: 
  
  
  • Enhanced Mudra Loan Limit: In the Mudra scheme the Central Government has increased the upper limit of loans from ₹10 lakh to ₹20 lakh to boost the credit to the MSMEs. 
  • Credit Guarantee Scheme: The new credit guarantee scheme has been floated to support term loans for the MSMEs for the acquisition of machines and tools whereby the collateral or third-party guarantee is not required. This removes or at least minimizes the costs of finance to the MSMEs. 

• Regulatory Reforms: There is a constant effort on the part of the Government to ease the compliances and regulatory structures for MSMEs to shape up the business environment. 

• Technology Adoption: Efforts are being made to ensure that the technological adoption of MSME is improved with support to digital payments, e-commerce, and related automation. This, in turn, aids them in attaining efficiency, productivity, and hence, the much sought-after competitiveness. 

• Market Access: In the domestic and international market the Government of India is extending help to MSME sectors in the form of trade and export promotion councils. 

• Skill Development: Some programs implemented in an organization are now being developed to suit the needs of the MSME employees, whereby the competency of the workforce is enhanced. 

• Entrepreneurship Development: The concept of development support has been adopted by the Government for youths, they picture a fruitful future involving the training of entrepreneurs and being offered capital. 
  
  

Inclusive Human Resource Development and Social Justice

Government objectives aim at the provision of equal opportunities for everyone in society. That is, it comprises the process of providing support for the underprivileged and achieving the proper distribution of development across regions. 

Key aspects of this focus include: 

• Saturation Approach: Seeing to it that all the target beneficiaries are given the Government programs and schemes entitlement. As a result, there is the ability to follow a specific population that may require health care services most. 

• Empowerment through Education, Health, and Skill Development: Establishing human capital as an investment by offering quality learning education, health care services, and developmental skills to the nation’s people. 

• Social Justice: Mitigating the problem of inequality and discriminative attitude in the country especially to the protected classes of people like the Scheduled Castes, Scheduled Tribes, and other minority groups. 

• Regional Development: Encouraging the development of all the regions of the country to eliminate the gaps and provide possibilities for every region. 
  
  

Specific initiatives under this focus include:

• Expanding social sector schemes: This includes enhancement in the coverage and efficacy of programs like PM Awas Yojana, Jal Jeevan Mission, and the National Health Mission. 

• Strengthening education: Enhancing the schooling standards, encouraging apprenticeship programs, and addressing the issue of tuition fees for needy students. 

• Enhancing healthcare: Increasing the availability of healthcare, priority to the primary level, and developing the use of digital health tools. 

• Empowering women: Promoting women's education, employment and self-employment. 

• Uplifting marginalized communities: Introduction of special schemes for the development of SCs, STs, and other vulnerable groups.
  
  

Manufacturing & Services

The Indian Government ’s current policy initiatives are to support manufacturing as well as the service industries to develop and create employment. 

Manufacturing 

• Focus on sectors with high export potential: Currently, the Government is determined to support manufacturing industries like electronics, automobiles, pharma, textiles, etc., where the extent of exporting is high. 

• PLI schemes: Various incentives and subsidies are being offered in the form of Production Linked Incentives where these sectors are being encouraged to invest in the country. 

• Strengthening supply chain: The Government is now working on the development of supply chains for the manufacturing industries locally to help cut imports and work towards achieving competitiveness. 

• Infrastructure development: Taking care of the transport and communication network, development of transport logistics, and facilities for energy transportation for the growth of the manufacturing zone. 
  
  

Services 

• Digital services: The Government is encouraging the IT, ITES, and BPM industries to set up in the country and there is also provision for special economic zones to facilitate this. 
  
  
• Financial services: The services sector also includes the provision of inclusion of more people in the financial sector and the encouragement of the use of electronic money. 
  
  
• Tourism: To achieve increased tourism the Government is focusing on the creation of tourism facilities and marketing of India as a tourist-friendly country.

Thus, the Government’s focus is to grow manufacturing and service sectors to achieve better economic growth, employment opportunities, and living conditions. 

Urban Development 

The Government’s emphasis on the construction of sustainable, efficient, accessible, and neighboring cities stems from the ability to create stable cities. Key areas of focus include:

• Affordable Housing: The available facilities created for extending housing opportunities such as Pradhan Mantri Awas Yojana (PMAY) for the construction of affordable homes for the needy population in the urban areas. 

• Urban Infrastructure: Building better transport systems, water and sewerage supplies, and disposal services in developed and developing urban areas. 

• Smart Cities Mission: The purpose of this approach includes the support of the development of intelligent cities equipped with modern technologies and the necessary initial base to increase people’s standard of living. 

• Urban Renewal: Transforming previously used and almost abandoned sectors into new and efficiently usable urban areas. 

• Public Transport: Providing incentives for the utilization of public transport through financing of the metro rail, bus rapid transit (BRT), and other forms of mass transit. 

• Urban Planning: Having proper planning of the cities and proper zoning laws to reduce wastage in infrastructural growth. 

• Disaster Resilience: Disaster preparedness and disaster mitigation as the foundation of managing natural disasters in urban areas.
  
  

Energy Security

Energy Security which is seen from an Indian perspective, is a strategic approach to answer to a country’s fast-growing energy needs in terms of quality, quantity, and accessibility. Key strategies include: 

• Energy Independence: Consumption of locally produced fossil fuels and exploring and tapping other sources of energy. 

• Renewable Energy: Developing renewable energy which consists of solar energy, wind energy, hydro energy, and biomass energy from power thereby affecting the reduction of carbon dioxide emission. 

• Energy Efficiency: Enhancing measures for using energy efficiently in different fields for the proper use of energy. 

• Grid Modernization: Improvement of the physical transmission network for electricity by upgrading sub-stations and transmission lines for increased efficiency, reduced losses, and incorporation of renewable energy sources. 

• Clean Fuels: Reducing the use of gasoline and diesel cars by encouraging the use of cleaner fuels such as Compressed Natural Gas (CNG) and Electric Vehicles (EVs). 

• Strategic Partnerships: In the provision of energy supplies and acquisition of technology through synergies with other countries. 
  
  

Infrastructure 

Any country or region needs to have sustainable energy infrastructure for it to realize energy security. Key infrastructure development includes: 

• Power Grid Expansion: Upgradation and development of the transmission and distribution infrastructure to ensure smooth distribution of power all over the country. 

• Renewable Energy Infrastructure: Building up renewable energy generation resources such as solar power plants, wind power plants, and integration substations. 

• Oil and Gas Pipelines: Increasing the downline of pipelines to enhance the capability of the transportation of crude oil and natural gas. 

• Storage Facilities: Constructing stockpiles in natural gas, petroleum products, and renewable energy facilities like batteries in case supply is disrupted. 

• Research and Development: Spending on research to engineer new technologies in the area of energy production and reducing wastage. 

In this regard, through developing the aforementioned focus areas, the Government seeks to foster a sustainable energy system for the advancement of the country’s economy and society while combating climate change and ensuring energy for everyone. 

Innovation, Research & Development

Related to this, the Government has identified the development of a strong innovation culture, as well as encouraging research and development as a way of enhancing economic growth as well as solving various problems affecting society. Key initiatives include: 

• Anusandhan National Research Fund: This fund will be operationalized to enhance the capacity of research as well as innovation in different fields. 

• Start-up Ecosystem: Further backing of start-ups through different policies and measures for sustaining venture and employment. 

• Research and Development Infrastructure: To strengthen the research capacities; establishment of research facilities, and laboratories. 

• Public-Private Partnerships: Fostering partnerships between institutions of learning, business, and Government in research and development endeavors. 

• Intellectual Property Rights: Improving the Legal Protection for Intellectual Property Rights to Promote Innovations. 

• Talent Development: The strategy of investing in people through human capital development aimed at the creation of an adequate stock of researchers and innovation specialists. 
  
  

Next Generation Reforms 

The Government is fully prepared to embark on proper and sustainable development to support the realization of progressive changes and enhancement of business environments. Key areas of focus include:

• Ease of Doing Business: Enhancing the business environment by continuing the process of reforms that affect regulations and increasing digitalization. 

• Labor Reforms: Overhauling of labor market by increasing flexibility and employment opportunities through lately reforms. 

• Financial Sector Reforms: Expanding the access of people to financial services and increasing the level of financial stability. 

• Tax Reforms: The general structure of taxation and the degree to which taxes are complied with. 

• Infrastructure Development: Correcting the infrastructure scarcity and upgrading the infrastructures to have more support for economic growth and integration. 

• Digital India: Broadening of the internet space and solutions to advance the digital economy and administration. 

The strategies of the Government include emphasizing innovation, research and development, and next-generation reforms to make India a technological, innovative, and economic front-runner country. 

Budget Estimates 2024-25

The Union Budget for 2024-25 laid out the vision of the economic growth of the country which is propelled with a massive booster dosage of Capital Expenditure, Infrastructure Spending, and Social Sector expenditure.

Fiscal Stance and Expenditure

• Total Expenditure: The Government had set apart Rs. 47.65 lakh crore, which is 6 percent higher than that of the previous year. This indicates a common coalition to work to stimulate economic growth and development. 

• Capital Expenditure: Another general area of the budget, capital expenditure was given a massive improvement with a given allocation of Rs. 15.01 lakh crore, implying an overall increase of almost 18.2% increase. It is an investment that is directed strategically aiming at putting down structures, fostering employment, and boosting the economic turnover. 

• Fiscal Deficit: The Government maintained a fiscal discipline by targeting a deficit of 5.1% of GDP, demonstrating a commitment to fiscal consolidation while balancing expenditure needs.

• Transfers to States: Realizing the need to foster Co-operative Federalism the budget provided only Rs. 22. 91 lakh crore for transfers to states to enable them to undertake policy and development interventions. 
  
  

Sectoral Allocations 

• Agriculture: The budget remained pro-agriculture and the measures that were planned included increasing farmers’ income, increasing agricultural exports, and availability of food. 

• Infrastructure: A huge budgetary provision was made for physical connectivity which includes roads, railways, airports,s, and even other digital platforms. This investment will enhance access to communication networks, increase the doing business, and offer employment opportunities. 

• Education: According to the structure of the budget spending, the Government underlined such priorities as quality education, vocational training, and widening access to tertiary education. This accords with the general Government’s Calgary goals of having a skilled and knowledgeable workforce. 

• Healthcare: Education and improving the healthcare system were focus areas; this involved working to develop healthcare infrastructure, and coverage and reducing the incidence of diseases. Some of the provisions in the budget were meant to enhance the healthcare duality and the level of healthcare attainable by every citizen. 

• Social Welfare: Chancellor Gordon Brown delighted not only the self-identified ‘ feminist ’ members of the audience, as he restated the Government’s priority in social spending that targets women, children, and low-income earners. This equally buttresses the Government’s call for growth for all. 

The Budget Estimates for 2024- 25 laid out a clear vision of India’s growth plan with a renewed focus on capital outlay/ expenditure, development of infrastructure projects, and continued social welfare schemes. The concept of inclusive growth as well as sustainable development can be seen running through the entire process of budgeting. 

A Comprehensive Analysis of Indirect Tax Changes

The budget for the financial year 2024-25 provided by the Union Budget regarding several principal shifts to the Indian indirect tax system. All these changes were made to increase the level of economic activities, supporting domestic industries, increasing the competitiveness of export sectors, and sensationalization of tax systems. Mature after a year, the GST persisted as the primary theoretical structure of the budget; nevertheless, alterations to customs duties and other indirect taxes have also been included. 

Goods and Services Tax (GST) 

The highlights of the initial GST budget speech were its ability to rationalize the structure of indirect taxes, reduce compliance costs, and enhance the Government ’s revenue mobilization. To further enhance its efficacy, the Government  proposed:

• Simplification and Rationalization: Contained in the budget was a pledge to streamline the structure of the GST, this might have been by cutting the number of tax bands or exemption rates. This would result in modification of the tax system and thus, the overall compliance costs for firms would decrease. 

• Expansion: The Government said that it planned to take steps to bring several sectors/activities, which are beyond the GST regime now, into the tax net. This could involve extending the list of commodities and services that are under the GST making the base larger. 
  
  

Customs Duties 

The budget brought in some alterations to the customs duties having some specific aims and purposes which are to boost the domestic industry, encourage export, and overcome the imbalance of trade. 

Reductions in Customs Duties 

• Mobile Phones and Components: To support the manufacturing of the products domestically and bring down the prices for consumers, customs on mobile phones, PCBs, and chargers were reduced. 

• Critical Minerals: Understandably appreciating the need for minerals such as lithium, copper, cobalt, and rare earth elements the Government moved for the total removal of customs duties on 25 strategic minerals while proposing a reduction of the customs duties on two others. Thus, this was to increase domestic processing and refining capacities. 

• Marine Products: To improve the export competitiveness of Indian seafood, customs duty relating to broodstock, polychaete worms, shrimp and fish feed was lowered , 

• Leather and Textiles: To boost the exports from the leather and apparel industries customs duties on some of the inputs were cut as well. 

• Precious Metals: To encourage local processing in the jewelry industries, tariffs on the importation of gold, silver, and platinum were reduced. 

• Other Metals: To cut production expenses related to such areas as the steel and copper industries, customs tariffs on ferro nickel and blister copper were abolished.
  
  

Increases in Customs Duties 

• Ammonium Nitrate: For the same reasons as supporting domestic production and safety issues, customs duties on ammonium nitrate were up. 

• PVC Flex Banners: Because of the loss of business due to the imports of non-biodegradable and hazardous PVC flex banners the customs

duties were enhanced. 

• Telecommunication Equipment: To encourage the home production of telecom equipment, the customs duties on certain components of PCBA were raised. 
  
  

Trade Facilitation 

To ease trading processes and boost exports, the budget upped the time allowed to export imported goods that have been repaired from within the country from six months to one year. Also, the time for repair of goods imported to be further exported under warranty was changed from three to five years. 

Based on the proposed changes in the structure of indirect taxes, several broad effects are conceivable for the Indian economy. Through the removal of customs duties on specific inputs the Government is trying to increase the competitiveness of the domestic-oriented industries due to the reduction in cost of production. At the same time, the raising of customs tariffs for some goods aims at supporting home industries and solving environmental questions. The current initiatives to flatten the GST structure are another way of reducing compliance costs to the business and enhancing the administration of the tax. 

A Detailed Analysis of Direct Tax Changes

Simplification & Rationalization of The Tax Regime 

• Comprehensive Review of the Income Tax Act: This is under the Government's recommendation to undertake a complete revision of the Income Tax Act to rationalize the language used. This is to increase the level of transparency and eliminate or at least reduce the cases of likely misunderstandings between the taxpayer and the authorities responsible for the taxation process. The Government believes that by presenting the Act in simpler forms, people would be more compliant with the taxation laws with little occurrences of litigations. 

• Consolidation of Tax Exemption Regimes for Charities: In addition, it recommended that all the various tax exemption standards encompassing charitable trusts should be reformed to encompass a common format. The merging of the above aims to make it easier for charitable organizations and remove some of the hassles involved. 

• Rationalization of TDS Provisions: To ease general tax compliance in the country the Government has suggested combining various TDS rates. This is expected to ease the load of compliance activities on both, the taxpayers, and the Taxing Authorities. Also, to reduce the pressure on taxpayers, minor TDS-related delays are no longer punishable under the criminal law to encourage taxpayers, especially new ones, to cooperate, and to follow standard operating procedures to be implemented for TDS defaults. 
  
  

Improving Delivering of Taxpayer Services and Solving Disputes 

• Digitalization of Tax Services: The Government plans to transact all the other tax services to be fully digital to increase the convenience to taxpayers. This vision of the tax administration to shift towards more or less paper-less means that the authorities hope to shorten the time required for handling the country’s tax affairs and ultimately offer better service to the clients. 

• Accelerated Dispute Resolution: To tackle the issue of the backlog of cases awaiting consideration on the matter with taxation, the Government intends to come up with further manpower to subdue the backlog. The option of using the Vivad Se Vishwas Scheme gives taxpayers a way to sort out the remaining issues on taxation with assessment year through an out-of-court settlement. 

• Increased Appeal Thresholds: The Government would increase monetary ceilings for appeals so that only important cases can be taken to court to save the public and legal institutions’ costs. 
  
  

Fostering Investment and Growth 

• Promoting Startups: These changes, including the elimination of angel tax, can be considered as good steps towards the establishment of a proper environment for startups. This way, the Government intends to popularize investments in seed-stage firms to enhance inventions. 

• Supporting Cruise Tourism: Therefore increasing employment opportunities, and debt repayment as well as enhancing the domestic tourism business for the shipping companies operating in the country. 

• Enhancing the Diamond Industry: Foreign mining firms are encouraged to offer safe harbor rates for their raw diamonds sold in India since such measures are intended to boost India as the leading hub in the cutting and polishing of diamonds. 

• Attracting Foreign Investment: Originally, lowering the corporate tax rate for foreign companies is aimed at making India a preferred investment destination for MNCs. 
  
  

Deepening the Tax Base 

• Increasing Security Transaction Tax (STT): In the Government’s bid to increase its revenues, the STT on futures and options will be raised. 

• Taxing Income from Share Buybacks: To remove the anomalies in the present system of taxation, the Government should impose a tax on the income received by the shareholders in respect of share buybacks. 
  
  

Improving the Systems of Social Security and Other Policies 

• Expanding NPS Coverage: Proposing the increase of deductible limits for employers and employees for contribution to the NPS is an effective way to encourage retirement planning and also enhance social security. 

• Amnesty for Small Foreign Asset Holders: Reducing penalties for not reporting foreign income below a certain threshold is again aimed at getting people to report it without resorting to enforcement agencies. 

• Other Tax Reforms: Elimination of equalization levy, increase of tax incentives for some funds, and changes in the Benami Transactions Act are designed to enhance the state of the overall taxation. 
  
  

Personal Income Tax Relief: A Detailed Breakdown

Increased Standard Deduction 

• The standard deduction is the amount that is fixed each year and can be used as a credit from overall income before computing the tax amount. 

• Previous Standard Deduction: The amount allowed as the standard deduction was ₹50, 000 for the whole year. This implied that there was a Scope to deduct this amount from the Taxable Income to arrive at a reduced income to be taxed. 

• Increased Standard Deduction: However, remarkable changes were made to the tax rates which included the standard deduction of ₹ 75,000 per annum as presented in the budget. This is a steeper ₹ 25,000 from the initial level. 

• Impact: This is because with a higher standard deduction one’s taxable income will be lower therefore tax payable is also low. This goes directly a straight to the holders of salaries, and pensioners. 
  
  

Changes in tax slabs for the New Tax System

That new system of income tax introduced a few years back came with a simple structure of tax slabs with lower rates than that of the previous system. Indeed, the budget built on this regime to the following. 

• Simplified Structure: As opposed to the old regime, there are fewer tax slabs under the new regime, hence each calculation process is simpler for the taxpayer. 

• Lower Tax Rates: In broad terms, the new tax rates are considerably lower than the old regime tax rates. 

• Revised Tax Slabs: The budget proposed changes in the tax slabs under a new regime which are as follows to offer further tax relief to the taxpayers. 

• Impact: This means that the new tax slabs in aggregate with the new low tax rates can result in a lot of tax exemptions for anyone who earns within a certain income. 
  
  

Critical analysis 

The budget presented has an aggressive political mission of India’s actionable development plan with a focus on agriculture, employment, social welfare, and infrastructure. On this basis, there is a remarkable systemization of approaches toward the solution of the national challenge; however, it will not dispute the fact that there is equal virtue and vice. One will be hard-pressed to fault this budget as it aims at inclusive growth, a digital push, and the building of infrastructure. There appear, however, to be important deficiencies in the fundamental requirements of translating proposed schemes into reality, underpinning their sustainability, and establishing strong public-private partnerships. Furthermore, the use of new monitoring and evaluation frameworks to assess the effectiveness of the indicated schemes is mandatory. 

On the positive side, the budget presents a picture of hope, but the key issues like the practicality of implementing the budget, proper distribution of resources, and eradicating social inequalities that go deep-rooted need to be looked into in anticipation of the desired positive impacts. 

Conclusion 

The Union Budget 2024-25 has provided a vision map for India for the coming fiscal year based on more inclusive growth, sustainability, and innovation. These are well-coordinated efforts; in agriculture, the job market, MSME, infrastructure, and social sectors that mirror the nation’s problems. Nevertheless, for these initiatives to produce positive results, there is the issue of implementation and evaluation mechanisms. Although the budget is solid and sets a positive foundation for India’s future, authorities must examine how the budget is divvied up and eliminate structural imbalances if the intended effects are to be realized. Finally, what the budget envisions and aims at creating: a resilient, productive, and inclusive economy will demand consistent and joint endeavors to turn the vision into reality. 

 

---