Budget 2024 Highlights: What the New Budget Means for You

Overview

Every financial year, the budget is the most awaited event in India for both the businesses and the public. This decides the nation’s trajectory by strategically allocating resources and prioritising key development areas.

The Union Budget 2024-2025 was announced by honourable Finance Minister Nirmala Sitharaman as the future prospect of developed Bharat, also named as the “Journey Towards Viksit Bharat”. With a focus on employment, skilling, MSMEs, and the middle class, the budget shows the strong commitment of the Indian government toward the high-impact sector with its strategic financial allocation. 

But there is more to it. This blog put the spotlight on all the highlights of the Union Budget 2024-2025 in a brief. 

Let’s take a look. 

Key Focus Areas in the Union Budget 2024-2025

Finance Minister Nirmala Sitharaman’s Budget proposals provide a detailed blueprint to help India become a developed nation. The budget focuses on key areas to create opportunities for everyone in “Viksit Bharat”. It aims for continuous economic growth, social progress, and technological improvements.

The Finance Minister presented the Final Budget on July 23, 2024, where she highlighted that this year’s budget focuses on employment, skills development, small and medium enterprises (MSMEs), and the middle class. The main priorities of the budget are:

• Stock Market
• Employment and Skilling
• Productivity and Resilience in Agriculture
• Inclusion of Human Resource Development and Social Justice
• Energy Security
• Urban Development
• Manufacturing and Services 
• Next Generation Reforms
• Infrastructure 
• Innovation, Research and Development 

The Budget also includes several changes in direct and indirect taxes. To know more let’s read into the highlights of the budget.

Highlights of the Union Budget 2024-2025

Here are the highlights of Union Budget 2024-2025 (sector basis) that will give you an in-depth view of what this year’s session of Viksit Bharat brings to the table:

Stock Market 

The Union Budget 2024 introduced several changes and initiatives that directly impacted the stock market and investor’s interest. After the announcement, the Indian stock market faced a sharp decline significantly with NSE Nifty 50 and S&P BSE Sensex dropping about 1% each. Here are the key highlights that you need to know:

• Capital Gains Tax Increase: The government raised the short-term capital gains tax from 15% to 20% and introduced a 12.5% tax on long-term capital gains, eliminating the indexation benefit. However, the exemption limit for long-term capital gains was increased from ₹1 lakh to ₹1.25 lakh per year.

• Securities Transaction Tax (STT): The STT on futures and options was increased to 0.02% and 0.01%, respectively. Additionally, income from share buybacks will now be taxed for recipients, which was previously not the case.

• Disinvestment Concerns: The Finance Minister did not provide a disinvestment target for the current financial year, causing negative sentiment in the markets. Stocks of potential disinvestment candidates fell by up to 8%.

• Infrastructure Push: A silver lining was the continued focus on infrastructure development with a major allocation of Rs. 10 lakh crore. This positively impacted sectors like construction, engineering, and capital goods.

Overall, the Budget 2024 was a double-edged sword for the stock market. The tax changes have negatively influenced investor’s sentiment and market performance in the short term, showcasing high volatility. 

Agriculture and Rural Development

Keeping the agriculture sector as the top priority, the government has allocated ₹1.52 lakh crore for agriculture and related sectors in the Union Budget 2024-2025. Let’s see what it entails:

• 109 new high-yielding and climate-resilient crop varieties to be introduced.
• 1 crore farmers to be trained in natural farming practices over 2 years.
• 10,000 bio-input resource centres to be established for natural farming support.
• Farmer-Producer Organisations, startups, and cooperatives to be promoted for vegetable supply chains.
• Strategy to achieve self-reliance (Atmanirbharta) in oil seeds like groundnut, mustard, soybean, sesame, and sunflower.
• Digital Public Infrastructure (DPI) in agriculture to cover 6 crore farmers and their lands in 3 years. 
• Kisan Credit Cards based on Jan Samarth to be issued and enabled in 5 states.
• Financial support for setting up a network of Nucleus Breeding Centres for shrimp broodstocks.

This initiative reflects the state’s commitment to improve agricultural productivity, promoting sustainable farming practices, and supporting farmers across the country.

Education & Employment

FM Nirmala Sitharaman allocated major investments in the education and employment segment, aiming to enhance skill development and create job opportunities. Here are the key initiatives announced:

• The government has introduced three new schemes to encourage employment in the formal sector:

• Scheme A: First Timers: Aims to provide a direct benefit transfer of up to ₹15,000 (in 3 installments) to first-time employees registered with the EPFO (Employees’ Provident Fund Organisation).
• Scheme B: Job Creation in Manufacturing: Aims to offer incentives to both employees and employers based on their EPFO contributions in the first 4 years of employment.
• Scheme C: Support to Employers: Aims to reimburse employers up to ₹3,000 per month for 2 years based on their EPFO contributions for each additional employee. It includes all additional employment within a salary of ₹1 lakh per month.

• Besides this, the government will launch a new centrally sponsored skill development scheme in collaboration with industry and state governments:
  • 20 lakh youth will be trained over 5 years.
  • 1,000 Industrial Training Institutes (ITIs) will be upgraded with a focus on outcome orientation.
• The Model Skill Loan Scheme has been revised to provide loans up to ₹7.5 lakh for students, with a guarantee from a government-promoted fund.
• The budget also includes financial support for higher education loans up to ₹10 lakh for domestic institutions. 1 lakh students will receive e-vouchers annually, providing a 3% annual interest subsidy on the loan amount.

Inclusive Human Resource Development and Social Justice

• Women-Led Development: Allocated over ₹3 lakh crore to promote development led by women and benefit women and girls.
• Rural Development and Infrastructure: Provided ₹2.66 lakh crore for enhancing rural development and infrastructure.
• Housing: Announced the construction of an additional 3 crore houses under the PM Awas Yojana for both rural and urban areas.
• Pradhan Mantri Janjatiya Unnat Gram Abhiyan: Launched a new scheme to improve the socio-economic condition of tribal communities, covering 63,000 villages and benefiting 5 crore tribal people.
• Eastern Region Development – Purvodaya:

• Formulating a comprehensive plan for the development of Jharkhand, Bihar, Odisha, West Bengal, and Andhra Pradesh.
• Support for the Amritsar Kolkata Industrial Corridor at Gaya, catalysing industrial development in the eastern region.
• Development of road connectivity projects such as Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, and more, with a total cost of ₹26,000 crore.

• Power Projects: Setting up a new 2400 MW power plant at Pirpainti at a cost of ₹21,400 crore.
• Andhra Pradesh Reorganisation Act: The government commits ₹15,000 crore this year, with more funds in future years, to support the Andhra Pradesh Reorganisation Act. It also focuses on funding the Polavaram Irrigation Project and essential infrastructure in the Kopparthy and Orvakal nodes.
• Banking Services Expansion: Setting up more than 100 branches of India Post Payment Bank in the North East region.

Manufacturing and Services

The initiatives aim to strengthen the MSME sector, improving manufacturing capabilities, and create job opportunities. Here is what it carries:

Upgrade MSMEs

• Credit Guarantee Scheme: New scheme helps MSMEs get term loans for machinery without collateral, with a guarantee cover of up to ₹100 crore per applicant.
• In-House Credit Assessment: Public sector banks will assess MSMEs for credit internally, using a new model based on digital footprints.
• Enhanced Mudra Loan Limits: Increased from ₹10 lakh to ₹20 lakh for successful borrowers under the ‘Tarun’ category.
• TReDS Platform Changes: Mandatory onboarding threshold of TReDS reduced from ₹500 crore to ₹250 crore.
• Expansion of SIDBI: Open new branches to serve major MSME groups and deliver direct credit in 3 years.
• Food Irradiation Units and Testing Labs: Support for 50 food irradiation units and 100 food quality testing labs with NABL accreditation.
• E-Commerce Export Hubs: Institute E-Commerce Export Hubs to help MSMEs and artisans sell products globally.

Manufacturing and Services Upgrades

• Internship Opportunities: 1 crore internships in top 500 companies with a monthly allowance of ₹5,000.
• Investment-Ready Industrial Parks: Development of “plug and play” industrial parks with states and the private sector.
• National Industrial Corridor Development: Sanctioning of 12 industrial parks under the National Industrial Corridor Development Programme.
• Critical Mineral Mission: A mission to recycle critical minerals and promote domestic production.
• Offshore Mining Blocks: Release of the first auction of offshore mining blocks.
• Insolvency and Bankruptcy Code Improvements: Introduction of an Integrated Technology Platform to improve outcomes under the IBC and extension of C-PACE services.

Urban Development Initiatives

In this sector, the budget focuses on improving infrastructure, housing, sanitation, and economic opportunities in large cities through targeted investments and reforms. Here is a sneak peak into the plans:

• Transit Oriented Development: Initiative to create Transit Oriented Development plan for 14 large cities with populations over 30 lakh.
• PM Awas Yojana Urban 2.0: Scheme to meet the housing needs of 1 crore urban middle-class and poor families with an investment of ₹10 lakh crore, including ₹2.2 lakh crore in central assistance over the next five years.
• Sewage and Water Projects: State governments and Multilateral Development Banks will fund sewage treatment, water supply, and waste management projects for 100 large cities.
• Weekly Haat Development: Promote the establishment of 100 weekly ‘haats’ (street food hubs) in selected cities over the next five years.
• Stamp Duty Reforms: Schemes to encourage states to lower high stamp duty rates, particularly for properties purchased by women.

Energy Security 

Highlighting the needs of energy security in Viksit Bharat, the budget focuses on offering  free electricity through solar panels, promoting renewable and nuclear energy, and enhancing energy efficiency in industries:

• PM Surya Ghar Muft Bijli Yojana: Aims to offer 300 units of free electricity per month to 1 crore households via rooftop solar panels.
• Pumped Storage Projects: Introduce policies to promote electricity storage and integrate renewable energy.
• Nuclear Energy Development: Partner with the private sector to develop Bharat Small Reactors, Small Modular Reactors, and new nuclear technologies.
• AUSC Technology Plant: Establish a joint venture between NTPC and BHEL to set up an 800 MW commercial plant using Advanced Ultra Super Critical technology.
• Energy Audits and Efficiency: Conduct investment-grade energy audits for traditional micro and small industries in 60 clusters. 

Innovation, Research and Development

With the agenda of fostering innovation, research, and development (R&D), the budget 2024 mainly focused on India’s future prospects and growth. Here are the key outlines: 

• Private Sector Research Boost: Establishing a mechanism with a ₹1 lakh crore finance pool to promote private sector-driven research and innovation at a commercial scale.
• Anusandhan National Research Fund: Enactment of the fund to support basic research and prototype development. The estimated funding for the ANRF is ₹50,000 crore for the period from 2023 to 2028.
• Space Economy Expansion: Creating a ₹1,000 crore venture capital fund aimed at expanding the space economy fivefold in the next 10 years.

Infrastructure Sector

The Union Budget 2024-2025 aims to enhance connectivity and services across the country for a developed Bharat. Here is what is proposed in infrastructure sector:

• Capital Expenditure: Allocated ₹11,11,111 crore for capital expenditure.
• Support for States: Provided ₹1.5 lakh crore for long-term interest-free loans to assist states in resource allocation.
• Rural Connectivity: Initiative to launch Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) to ensure all-weather connectivity to 25,000 rural habitations.
• Irrigation and Water Projects: Financial support for projects like the Kosi-Mechi intra-state link and 20 other schemes, totaling ₹11,500 crore, under the Accelerated Irrigation Benefit Programme.
• Temple Corridor Development: Overall development of the Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Rajgir, Nalanda, and Odisha.

Reforms for Next Generations

Keeping the needs of the upcoming generation, the budget 2024 aimed at strengthening economic growth and employment opportunities across various sectors. Here are the key highlights:

• Land Reforms: The government collaborates with states to reform land-related policies in rural and urban areas.
• Labor Integration: Integration of e-shram portal with other portals for a comprehensive solution for labor services.
• Compliance Ease: Improve the Shram Suvidha and Samadhan portals to make it easier for businesses to comply with regulations.
• Climate Finance: Aims to create a new taxonomy for increased availability of funds for climate change adaptation and mitigation projects.
• FDI and Overseas Investment: Streamline foreign direct investment (FDI) and overseas investments to encourage the use of Indian Rupee and encourage foreign investments.
• NPS Vatsalya: New schemes for parents and guardians to contribute to minors’ National Pension System (NPS) accounts.
• Jan Vishwas Bill 2.0: The government is working on a new bill to further enhance the ‘Ease of Doing Business’ in India.

Parliamentary and Public Reaction to Union Budget 2024

The Union Budget 2024 sparked a lively debate both within Parliament and among the general public. While the government lauded the budget as a step towards a ‘Viksit Bharat’, opposition parties and experts raised several concerns.

Critics argued that the budget fell short of delivering important tax relief to the middle class, despite releasing new tax slabs. The increased focus on capital expense, while essential for infrastructure development, was questioned in terms of its impact on job creation and economic growth. Moreover, concerns were raised about the government’s ability to maintain fiscal discipline in the long run, given the increased cost as this will just create more debt to the country. Rahul Gandhi, the leader of Congress, quoted, “This budget does not provide any real solutions for the common man.” 
The public’s response was also similarly mixed on the budget 2024. While some appreciated measures like increased tax slabs and initiatives in the agriculture sector, others expressed disappointment over rising prices and the perceived lack of focus on social welfare programs. The budget’s impact on various sections of society became a subject of intense discussion, highlighting the complexities of balancing economic growth with social equity.

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