With a focus on promoting employment, improving agricultural production, accelerating economic growth, and easing infrastructural development, the Budget 2024–25 was released. The government has recommended a total expenditure of RS 47.65 trillion for FY 2024–25, showing a 6% increase over the revised projection for FY 2023–24, with a target budget deficit of 4.9%. Additionally, the budget predicts that overall receipts will reach RS 30.80 trillion, a 12% increase over the previous fiscal year. The goal of the fiscal deficit for FY 2024–2025 is 4.9% of GDP, which is a decrease from the 5.1% of the interim budget. This goal shows the government’s dedication to maintaining budgetary restraint while guaranteeing sufficient funding for industries that promote economic growth.
Priorities and Allocations
- Agriculture and Rural Development: sizeable RS 1.52 lakh crore is allocated to agriculture and related industries, demonstrating the government’s emphasis on resilience and productivity in this important area. Two such projects are the promotion of crop types that are adaptable to climate change and the expansion of the Kisan Credit Card (KCC) program to five more states. In addition, the budget calls for the creation of digital agricultural public infrastructure, with a goal of serving 06 crore farmers and their land. The government’s commitment to this industry is further demonstrated by the raising of the minimum support price for farmers and the emphasis on the rural economy as a major source of jobs.
- Employment, Skilling, and MSMEs: Recognizing the importance of taking advantage of demographic dividend, a substantial RS 1.48 lakh crore has been set aside for education, job creation, skill development, and assistance to Micro, Small, and Medium-Sized Businesses (MSMEs). Three new employment programs are unveiled, one of which pays new hires in the formal sector one month’s wages through the Direct Benefit Transfer (DBT) mechanism. Owing the issue of severely low women labor force participation rate, amounts of RS 3 lakh crore are allotted to different women-led development programs (women’s initiatives like hostels, creches, and skilling) in order to support women in the workforce. In addition, during the following five years, skill-building programs will be offered to 20 lakh youth.
The budget does away with the requirement for third-party guarantees by introducing credit guarantee schemes for MSMEs that are self-guaranteed. MSMEs will receive credit support during times of hardship, and the maximum amount available for MUDRA loans has been raised from RS 10 lakh to RS 20 lakh. Further with the goal of boosting start-ups and increase employment, angel tax has been abolished.
Infrastructure Development
The Budget 2024–25 maintains infrastructure development as a key component, proposing an 11% rise in capital expenditure to RS 11.1 trillion, or 3.4% of GDP. This funding will support both new and ongoing projects to improve ports, highways, railways, and urban infrastructure. Phase-4 of the Pradhan Mantri Gram Sadak Yojana (PMGSY) is one of the incentives the government offers to the private sector to participate in infrastructure.
Energy Transition
The budget emphasizes how critical it is to switch to greener energy sources. The development of energy storage facilities and rooftop solar panels will be encouraged under the PM Surya Ghar Muft Bijli Yojana. Nuclear energy research and development is being given a significant amount of financing, and MSMEs that switch to cleaner energy sources will get financial help and supervision.
Urban Development
Owing the fact that urban sector contributes around 63% to GDP of the country; the budget includes money to support urban development and innovation because it acknowledges cities as centers of economic activity. This involves supporting research and development to make urban areas more sustainable and economically vibrant, as well as smart city programs and infrastructure upgrades.
Tax Reforms and Relief
Although in terms of tax structure there is not much relief for any section of population, apart from tax simplification. However the budget modifies the structure of income levels for various tax rates which ultimately provided relief to taxpayers with yearly incomes between RS 7 lakh and RS 12 lakh. The goal of this modification is to preserve overall tax collection while reducing the financial strain on middle-class earnings.
Attracting Foreign Investments
Recognizing the importance of foreign investments in the growth and employment trajectory of the country, the budget includes initiatives to enhance ease of doing business, a drop in corporation tax from 40% to 35% for international companies, in an effort to draw in foreign investment. These changes should make India a more desirable location for international investment, resulting in increased economic expansion and employment creation.
To conclude, the Budget 2024–25 is a calculated attempt to traverse the intricate economic terrain while striking a balance between the necessity for expansion and financial prudence. Although the budget in not much populous in nature, the focus has been given to many macroeconomic indicators, like capital expenditure to lay a solid foundation for future growth, fiscal consolidation by bringing fiscal deficit down consistently, improving labor market indicators to reap the benefits of demographic dividend. The aim seems to create a resilient and sustainable economy, which is why it has given infrastructure, employment, agriculture, and energy transition top priority.
This budget’s ability to adjust to changing economic conditions and be implemented effectively will determine its success. The effects of these policies will be seen throughout the fiscal year and will determine the course of the nation’s economy in the years to come.
(Aamir Ahmad Teeli is Senior Research Fellow, Central university of Tamil Nadu, India, Email: [email protected]. And Dr. Firdous Ahmad Malik is Assistant Professor of Economics, Department of Management, University of People, Pasadena, California, United States. Email: [email protected])
