Finance Minister Nirmala Sitharaman’s seventh budget brings good news for the salaried middle class with increased standard income tax deductions. The budget 2024 reduces customs duties on electronic goods like mobile phones. To boost investments, the government has abolished the angel tax and cut corporate tax rates for foreign companies. These moves are expected to please investors and encourage more foreign direct investment. However, some new levies have disappointed stock markets. The budget retains an 11.1% increase in capital expenditure, though it now expects the private sector to play a larger role in infrastructure development.
Focus on Agriculture, Employment, and Skilling
Agriculture receives significant attention, emphasising research for both productivity and climate change adaptation. The budget prioritises crops like vegetables, oilseeds, and pulses, as well as export-oriented products like shrimp. Employment generation is a key focus, with Rs. 1.48 lakh crore allocated for employment subsidies in the formal sector. These schemes aim to benefit 29 million youth in new jobs through measures like providing the first month’s salary and supporting provident fund deductions.
budget also introduces a new centrally sponsored scheme to upgrade Industrial Training Institutes, expected to benefit two million young people. However, the effectiveness of previous skilling initiatives remains a concern. The budget also addresses the need to increase female labour force participation through public-private partnerships for women’s hostels and crèches.
Regional Development and Economic Reforms
The new Purvodaya scheme for the eastern region aims to boost infrastructure in India’s slowest-growing area. While this has sparked some controversy, it addresses the need for special attention to states with lower development indices, such as Bihar. The budget also allocates funds for projects in Andhra Pradesh, including its new capital and the Polavaram irrigation project. However, the much-anticipated next-generation economic reforms have been postponed pending a new economic policy framework.
The budget proposes some steps towards land reforms, such as digitization of rural and urban land records. Small and medium enterprises will have to wait for more detailed proposals to reduce their licensing and compliance burdens. Overall, the budget attempts to balance various economic priorities while addressing regional disparities and the demands of coalition politics.
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