The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, marks a significant moment as it is the first budget of the Narendra Modi-led government’s third term. This budget aims to set the stage for a “Viksit Bharat” (Developed India) by 2047, focusing on sustainable development, infrastructure, and inclusive growth. This analysis delves into the key highlights, implications, and potential impacts of the budget on various sectors of the economy.
Key Highlights of Budget 2024
- Theme and Vision: The budget revolves around the theme of “Viksit Bharat,” emphasizing four pillars: the poor (Garib), women (Mahilayen), youth (Yuva), and farmers (Annadata). This vision aims to create a comprehensive roadmap for development over the next two decades.
- Fiscal Policy and Economic Outlook: The Economic Survey preceding the budget projected a conservative GDP growth rate of 6.5% to 7% for the fiscal year. The government aims to address job creation and stimulate investments, particularly from China, to boost exports.
- Employment and Skill Development: A significant focus is placed on employment generation, with plans to skill 20 lakh youth over the next five years. The introduction of Employment Linked Incentives (ELIs) aims to encourage employers to hire more workers by providing financial incentives for the first four years of employment.
- Taxation: The budget retains the existing tax rates for the fiscal year 2024-25. Notably, there is no tax liability for individuals earning up to ₹7 lakh under the new tax regime. The corporate tax rate remains at 22% for existing companies and 15% for new manufacturing firms.
- Sector-Specific Changes:
- Agriculture: The budget proposes digitizing land records for six crore farmers, enhancing credit flow and transparency in agriculture. Funding for agricultural research focusing on climate resilience is also prioritized.
- Technology and Innovation: The impact of artificial intelligence (AI) on job markets was highlighted, with concerns about its potential to disrupt employment in sectors like business process outsourcing (BPO).
- Consumer Goods: The customs duty on mobile phones, accessories, and chargers has been reduced to 15%, making these products cheaper for consumers. Conversely, the prices of cigarettes, air travel, and textiles have increased.
- Infrastructure Development: The budget allocates significant funds for infrastructure projects, aiming to enhance connectivity and promote economic growth. This includes investments in roads, railways, and urban development.
Implications of Budget 2024
Economic Growth
The budget’s focus on infrastructure and job creation is expected to stimulate economic growth. By investing in key sectors and providing incentives for employment, the government aims to boost consumer confidence and spending. However, the conservative GDP growth forecast raises questions about the effectiveness of these measures in achieving robust economic recovery.
Employment Generation
The introduction of Employment Linked Incentives is a proactive step towards addressing unemployment, particularly among the youth. By incentivizing businesses to hire more workers, the government aims to create a more formal employment landscape. However, the success of this initiative will depend on the willingness of employers to participate and the overall economic environment.
Impact on Consumers
The reduction in customs duties on electronic goods is likely to benefit consumers by lowering prices. This move aligns with the government’s goal of promoting digital inclusion and accessibility. However, the increase in taxes on certain goods, such as cigarettes and air travel, may burden consumers in those sectors.
Agricultural Sector Reforms
Digitizing land records and enhancing credit flow for farmers are critical steps towards modernizing agriculture. These reforms could lead to increased productivity and better access to financial resources for farmers. However, the success of these initiatives will depend on effective implementation and the willingness of farmers to adopt new technologies.
Challenges Ahead
While the budget outlines a comprehensive plan for economic growth and development, several challenges remain:
- Global Economic Uncertainty: Geopolitical tensions and global economic conditions could impact India’s trade and investment landscape. The government must navigate these challenges to achieve its growth targets.
- Inflation Control: Addressing inflation remains a critical concern. The budget does not propose significant measures to control rising prices, which could affect consumer spending and overall economic stability.
- Implementation of Schemes: The effectiveness of the budget will largely depend on the successful implementation of proposed schemes and reforms. The government must ensure that funds are allocated efficiently and that programs reach the intended beneficiaries.
Budget 2024 presents a strategic vision for India’s economic future, focusing on sustainable development, employment generation, and technological advancement. While it lays a solid foundation for growth, the success of these initiatives will hinge on effective implementation and the government’s ability to address emerging challenges. As India strives towards becoming a developed nation by 2047, the path ahead will require careful navigation of economic dynamics and proactive policy measures.
