The Union Budget 2024 is a budget designed tactfully to imbibe the need for maintaining the growth rate of the economy at a higher trajectory on one hand and providing for inclusive growth on the other hand. The Union Budget has tried to reach directly to the poor, women, youth and the farmers making it a unique model of self-propelling growth strategy.
In short, it is focused on attaining the twin objective of growth with development. It is a novel attempt to increase the income and expenditure and production all about the same point of time. The idea is to help Indian economy grow at a rate in the range of 6.5 to 7 per cent while at the same time raise the per capital income of the huge populace of India by providing support to the weaker sections of society, creating opportunities for skill development to the hitherto dormant workforce, enhancing job opportunities for the new entrants to the job market and giving boost to the farmers to engage into gainful economic activities as the primary producers.
The budget has been crafted with a vision of transforming India into a “Viksit Bharat”.
The multipronged strategy to transform India into a developed nation can be explained with the help of following diagram:
Since India is still considered as an emerging nation, the government has tried to set priorities for Viksit Bharat, which can be considered as quite sensible keeping in view the need for optimum utilization of its limited resources. Our country is heavily populated country and so our growth strategy has to be essentially focused on balanced development of all the sectors of the economy.
Our geographic and demographic conditions are unique and therefore we may not probably follow the historical models of growth that were adopted by the developed nations who pulled themselves out from the developing to the developed stages at some point of time. For example, it may not be very apt for India to seek development in the services and manufacturing sector at the cost of keeping agricultural sector underdeveloped.
Priority 1: Promoting Productivity and resilience in Agriculture
The budget has made a provision of Rs. 1.52 lakh crore for agriculture and allied sector. The priorities for agricultural growth have been clearly defined as under:
- Improving productivity and resilience in agriculture by encouraging agricultural research for developing climate resilient varieties so that the dependence of the farmers on monsoons can be reduced over a period of time.
- Since the average size of land holdings is relatively uneconomical in the case of majority of farmers, the union budget has given priority to the systematic, orderly and all-round development of the cooperative movement in the agricultural sector.
- The budget also envisages to move towards self-reliance in the field of oil seeds of various types.
- As the vegetable prices often contribute towards high rate of inflation the budget sets a priority to improve vegetable supply chains by increasing the storage on one hand and marketing on the other.
- Keeping in line with the sustainable development growth strategies, the budget envisages to indulge one crore farmers across the country into natural farming supported by certification and branding in the coming two years taking support from scientific institutions and willing gram panchayats into this project.
- The budget will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of more farmers and their lands for digital crop surveys for agricultural crop and compiling the details of 6 crore farmers and their lands into the farmer and land registries.
Priority 2: Employment & Skilling
The budget is going to continue to give due importance to the recognition of first-time employees, by giving support to both the employees and the employers through ‘Employment Linked Incentive’ Scheme based on enrolment in the EPFO. The main initiatives are listed out as under
Scheme A: First Timers
– Provide one-month wage to all persons newly entering the workforce in all formal sectors.
– The direct benefit transfer of one-month salary in 3 instalments to first-time employees, as registered in the EPFO up to Rs. 15,000 to the eligible employees getting salary upto Rs. 1 lakh per month.
Scheme B: Job Creation in manufacturing
– Provide incentive at specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment.
Scheme C: Support to employers
– The government is going to reimburse to employers up to Rs. 3,000 per month for 2 years towards their EPFO contribution for each additional employee.
Promoting participation of women in the workforce
– Setting up working women hostels in collaboration with industry, and establishing creches.
– Organizing women-specific skilling programmes, and promotion of market access for women Self – Help Group (SHG) enterprises.
Skilling programme
– Launching a new centrally sponsored scheme, as the 4th scheme under the Prime Minister’s package, in collaboration with state governments and Industry, to promote skilling courses aligned to the skill needs of industry.
Skilling Loans
– The Model Skill Loan Scheme will be revised to facilitate loans up to Rs. 7.5 lakh with a guarantee from a government promoted Fund.
Education Loans
– Giving financial support for loans upto Rs. 10 lakh for higher education in domestic institutions.
Priority 3: Inclusive Human Resource Development and Social Justice
Source Union Budget 2024-25
Priority 4: Manufacturing & Services
The Union Budget has announced a package covering financing, regulatory changes and technology support for MSMEs and manufacturing, particularly labour-intensive manufacturing to help them grow and also compete globally, The major incentives are listed below:
- A Credit Guarantee Scheme for MSMEs in the Manufacturing Sector is proposed to be introduced to facilitate grant of term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee. The scheme will operate on pooling of credit risks of such MSMEs through a separately constituted self-financing guarantee fund which will provide guarantee cover up to Rs. 100 crore, while the loan amount may be larger. The borrower will have to provide an upfront guarantee fee and an annual guarantee fee on the reducing loan balance.
- Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. This is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria.
- A new mechanism for facilitating continuation of bank credit to MSMEs during their stress period shall be developed for MSMEs Credit availability is proposed to be supported through a guarantee from a government promoted fund.
- The limit of Mudra loans is proposed to be enhanced to ₹ 20 lakh from the current ₹ 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
- The turnover threshold of buyers for mandatory onboarding on the TReDS platform is proposed is to reduce from Rs. 500 crore to Rs. 250 crore for facilitating MSMEs to unlock their working capital by converting their trade receivables into cash,.
- SIDBI is slated to open new branches to expand its reach to serve all major MSME clusters within 3 years, and provide direct credit to them.
- Financial support for setting up of 50 multi-product food irradiation units in the MSME sector is proposed to be provided.
- E-Commerce Export Hubs are proposed to be set up in public-private-partnership (PPP) mode to enable MSMEs and traditional artisans to sell their products in international markets, . These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof.
- It is proposed to launch a comprehensive scheme for providing internship opportunities for 12 months in 500 top companies to 1 crore youth in a span of 5 years. An internship allowance of Rs. 5,000 per month along with a one-time assistance of Rs. 6,000 may be provided. Companies will be expected to bear the training cost and 10 per cent of the internship cost from their CSR funds.
- It is proposed to set up twelve industrial parks under the National Industrial Corridor Development Programme.
- Digital Public Infrastructure Applications are proposed to be developed to promote interface for productivity gains, business opportunities, and innovation by the private sector in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.
- An Integrated Technology Platform is proposed to be set up for improving the outcomes under the Insolvency and Bankruptcy Code (IBC) for achieving consistency, transparency, timely processing and better oversight for all stakeholders.
- The services of the Centre for Processing Accelerated Corporate Exit (C-PACE) shall also be extended for voluntary closure of LLPs to reduce the closure time.
Priority 5: Urban Development
- Housing needs of 1 crore urban poor and middle-class families to be addressed with an investment of ₹ 10 lakh crore.
- Projects and services through bankable projects for 100 large cities to be undertaken.
- 100 weekly ‘haats’ or street food hubs in select cities to be developed.
Priority 6: Energy Security
Continuing with the strategy announced in the interim budget, the Finance Minister has emphasized the need to achieve high and more resource-efficient economic growth, along with energy security in terms of availability, accessibility and affordability. The energy security policy is inclined to balance the imperatives of employment, growth and environmental sustainability.
- PM Surya Ghar Muft Bijli Yojana which is already in vogue, shall be further encouraged to enable 1 crore households obtain free electricity up to 300 units every month.
- A policy may be formed for promoting pumped storage projects for electricity storage and facilitating smooth integration of the growing share of renewable energy with in the overall energy mix.
- Government is looking forward to partner with the private sector to promote Research and development of small and modular nuclear reactors as Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat.
- A roadmap for moving the ‘hard to abate’ industries from ‘energy efficiency’ targets to ‘emission targets’ is likely to be formulated. Appropriate regulations for transition of these industries from the current ‘Perform, Achieve and Trade’ mode to ‘Indian Carbon Market’ mode will be put in place.
- Financial support may be provided for shifting them to cleaner forms of energy and implementation of energy efficiency measures.
Priority 7: Infrastructure
- The Central Government has made significant contribution towards building and improving infrastructure which has had a strong multiplier effect on the economy. This budget has provided Rs. 11,11,111 crore for capital expenditure at around 3.4 per cent of our GDP.
- A provision of Rs. 1.5 lakh crore for long-term interest free loans has been made this year also to support the states in their resource allocation.
- Investment in infrastructure by private sector is also to be promoted through viability gap funding and enabling policies and regulations. A market-based financing framework is likely to be brought out.
- The Budget affirms that all-weather connectivity may be provided to 25,000 rural habitations which have become eligible in view of their population increase.
- The Budget has provided financial support for projects with estimated cost of Rs. 11,500 crore such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes including barrages, river pollution abatement and irrigation projects.
- Infrastructure development is going to get a boost in the places that are centre of tourist attractions
Priority 8 : Research and Development
- Funding support shall be given basic research and prototype development and also for private sector-driven research and innovation at commercial scale with a financing pool of Rs. 1 lakh crore.
- The budget strives to expand the space economy by 5 times in the next 10 years, and for this, a venture capital fund of Rs. 1,000 crore will be set up.
Priority 9: Next Generation Reforms
The central government is likely to initiate and incentivize next generation reforms for :
- improving productivity of factors of production, and
- facilitating markets and sectors to become more efficient.
- Fiscal support shall be given for the land-related reforms by state governments both in the rural and urban areas covering (1) land administration, planning and management, and (2) urban planning, usage and building bylaws.
- Rural land related actions are slated to include (1) assignment of Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands, (2) digitization of cadastral maps, (3) survey of map sub-divisions as per current ownership, (4) establishment of land registry, and (5) linking to the farmers registry. These actions will also facilitate credit flow and other agricultural services.
- Land records in urban areas will be digitized with GIS mapping.
These and several other next generation reforms have been envisaged by the Union Budget 2024-25. If other things remain the same, The budget provisions are likely to create a synergetic effect is going to help Indian economy maintain its growth rate around 6.5-7% in the current financial year.