Union Budget 2024 Highlights: Highest Allocation For Defence, Hike In LTCG, And More - What Follows Next
Union Budget 2024 Highlights: Please follow this space for all the latest updates related to Budget 2024, to be tabled by Finance Minister Nirmala Sitharaman today
Pankaj Jathar, Chief Executive Officer of NIIT Ltd., praised the budget announcement for laying a robust groundwork to advance education, skilling, and employment opportunities. He commended the allocation of Rs 2 lakh crore towards five employment and skilling schemes, coupled with Rs 1.48 lakh crore dedicated to education, employment, and skilling initiatives, highlighting the government's strong commitment to the nation's youth and economic growth.
Sanjeev Dasgupta, CEO of CapitaLand Investment India, applauded the government's initiatives to establish 'plug and play' industrial parks and promote 'Cities as Growth Hubs'. He emphasized that these measures will unlock significant investment opportunities and stimulate demand for modern commercial spaces across the country. Furthermore, Dasgupta noted that these initiatives will attract global firms to bolster their manufacturing operations in India, thanks to the added benefits provided.
Sanjay Agrawal, Head of Presales and CTO at Hitachi Vantara India and SAARC and Chair of SNIA, praised the government's interim budget for its strong emphasis on nurturing a robust manufacturing ecosystem in India. He highlighted the budget's focus on digital infrastructure, skilling initiatives, and industrial parks, which align closely with Hitachi Vantara's strategy of fostering a digitally transformed and globally competitive manufacturing sector.
Agrawal affirmed Hitachi Vantara's commitment to supporting India's industrial growth journey by offering advanced solutions that enhance operational efficiency, enable data-driven decision-making, and bolster supply chain resilience.
Ravi Bhushan, founder and CEO at BrightCHAMPS, said, strategies for skilling students and ensuring future-readines is clearly a major consideration. "I'm glad to see that the allocation for education has gone up by over 10 per cent compared to last year. While we’re still short of the 6 per cent allocation from the overall budget that most OECD countries adhere to and has been recommended by the New Education Policy, it certainly is a step in the right direction. It is interesting to see that skilling of young students and ensuring that they are future-ready and employable is clearly a major consideration within the new policies and schemes that have been announced. I believe this is very important to secure the futures of our more vulnerable students and youth, and I have hope that in subsequent years, we will see a greater focus on skill-based practical education in schools across state boards. I’m also particularly keen to see how the programme to offer one crore internships within top companies shapes up – it could truly pave the way for strong public-private partnerships and provide policy-makers with vital information on what industry-ready skills need to be focussed on in the coming years."
Sujay Pidara, Founder of MyJobee, highlighted the significance of the Budget's initiatives aimed at fostering employment, encouraging women's participation, and enhancing skill development. He stressed the importance of initiatives such as establishing working women's hostels and creches, which not only ensure safety but also provide financial incentives, thereby promoting higher female workforce participation. "The commitment to upskilling 20 lakh youth over five years through upgraded Industrial Training Institutes is a much-needed strategy," he added.
Rajiv Memani, Chairman and Managing Partner of EY India, remarked that the 2024 Indian budget underscores a commitment to clear and stable policies coupled with conservative estimates. Its focus on job creation, large-scale skilling initiatives, and simplifying the tax process is expected to yield significant long-term benefits.
Manas Pal, Co-Founder of PedalStart, stressed the critical impact of eliminating the angel tax burden on startups. He said that this reform enables startups to retain a larger portion of the capital they raise, empowering them to allocate resources more efficiently towards growth and innovation. Not only does this change enhance the attractiveness of investing in Indian startups, but it also cultivates a more dynamic and thriving entrepreneurial ecosystem.
Bantwal Ramesh Baliga, Group CEO of Acquaviva, highlighted the transformative impact of the budget's new scheme to encourage the hiring of first-time employees in the manufacturing sector. This initiative, benefiting 3 million youths and their employers through direct incentives linked to EPF contributions over four years, is seen as a catalyst for job creation and the development of a skilled workforce.
In addition, Baliga welcomed the budget's focus on promoting women's participation in the workforce, particularly in sectors such as hospitality and retail. This initiative aims to diversify the workforce and acknowledges the valuable contributions that women can make to these industries.
Ratan Singh Sehgal, MD of Hybon Elevators & Escalators Pvt Ltd, emphasised the significance of the budget's focus on transforming cities into 'Growth Hubs' through strategic economic and transit planning. "By partnering with states and implementing town planning schemes, this approach aims to upgrade urban infrastructure and stimulate economic development at the micro level. The expansion of the tourism corridor will benefit the hotels and restaurant industry," he added.
Subburathinam P, Chief Strategy Officer at TeamLease Services Limited, highlighted the potential impact of a new scheme to encourage job creation in the manufacturing sector by hiring first-time employees.
"This initiative, which provides incentives to both employees and employers based on their EPFO contributions for the first four years of employment, will encourage formal hiring and foster a more stable and productive workforce. As more manufacturing plants are being set up around Tier 2 and 3 cities, the youth in these regions are more likely to benefit from such initiatives," he added.
Varun Alagh, CEO and Co-founder of Honasa Consumer, praised the budget's efforts to stimulate consumption and strengthen purchasing power parity within the FMCG sector. He lauded the government's initiatives aimed at enhancing infrastructure, increasing disposable incomes, and fostering job creation, which is anticipated to bring substantial upliftment to the rural economy.
"The announcement of substantial job creation initiatives, particularly in manufacturing and services, will help reduce unemployment and provide stable income sources for many families," he added.
Somesh Dasgupta, Whole-time Director at India Power Corporation Limited, praised FM Nirmala Sitharaman's Union Budget 2024 for its comprehensive approach towards sustainable and diversified energy sources. He highlighted the importance of addressing the challenge of providing round-the-clock (RTC) power, particularly during peak hours. Dasgupta lauded the exemption of customs duty on lithium as a significant incentive for boosting the production of battery storage systems.
Samajwadi Party Chief Akhilesh Yadav said, "We were all asking for MSP for farmers, a package for farmers and the poor. But this government is giving packages to those who are running the government... Not that we are not in favour of states getting packages for development, but other states should not be compromised... For 10 years you took away jobs from the youth, and now you are giving jobs which pay only Rs 5000, especially at a time when government employees are demanding the implementation of the 8th pay commission..."
Mr. Kunal Sethi, CEO of The Detailing Mafia, highlighted that the budget seeks to rejuvenate both the startup ecosystem and the manufacturing sector. He emphasised that the removal of the angel tax is a significant step that will enhance startups' confidence. Additionally, initiatives aimed at increasing manufacturing jobs, employment opportunities, and skill development among youth and women are expected to create a skilled workforce with disposable income, potentially stimulating industry growth.
Congress Chief Mallikarjun Kharge on Wednesday called the Budget 2024 ‘discriminatory and unfair’. The politician said that the government is allotting special packages for states governed by their party. “They (BJP) are saying that they allotted special package to Bihar to build roads but roads are built anyway. All of this is deceptive,” Kharge noted.
Addressing the Rajya Sabha on Wednesday, FM Sitharaman dismissed the discrimination allegations being laid by the Opposition. The Finance Minister accused the Opposition of misleading and misinterpreting the Budget.
She said, "If a particular state is named in the speech, does it mean that programs of GOI don't go to these states? This is a deliberate attempt of the Opposition led by Congress to give the impression to people that nothing has been given to our states."
Finance Minister Nirmala Sitharaman announced an exemption on customs duties for three cancer treatment medicines in Budget 2024. Vaibhav Jain, CEO, Aayush Bharat, expressed satisfaction with the government's focus on the healthcare sector in the Budget. He noted, "Finance Minister Nirmala Sitharaman has today allocated Rs 89,287 crore for developing, maintaining, and improving the country's healthcare system, a slight increase from the Rs 88,956 crore allocated in FY24. This increase will significantly bolster India's growing healthcare system, and we hope the Ayush sector will also receive adequate funding. Additionally, the government has allocated Rs 2,143 crore for the Production Linked Incentive Scheme (PLI) for the pharmaceutical industry. With the US set to adopt the Biosecure Act, which prohibits US federal government bodies from sourcing equipment and services from Chinese pharma companies, this support will propel the Indian pharma industry to new heights."
Amit Uplenchwar, director, Kalpataru Projects International Ltd, said that energy security and infrastructure have been highlighted as top priorities in the Budget proposal by the Finance Minister. "The allocation of Rs 11 lakh crore for capital expenditure, the government has pledged to maintain strong fiscal support for infrastructure investment. The provision of Rs 1.5 lakh crore for long-term interest-free loans to states for infrastructure development is a positive announcement that will significantly boost state-level projects. It is encouraging to see the government promoting niche areas in the renewable energy ecosystem, such as pumped storage hydro projects and modular nuclear reactors. Moreover, the commitments to enhance private investment in the sector through viability gap funding, enabling policies and regulations, and a market-based financing framework will attract private capital and stimulate business growth within the domestic market. A big thumbs-up to this futuristic Budget!"
Experts from the technology sector said that the focus on innovation and research via the Anusandhan National Research Fund could prove to be a game-changer for the industry. Punit Sindhwani, Founder and CEO, PAXCOM, said that the program will help provide support for developing domestic solutions and become self-dependent in technology.
The Budget's focus on employment and skill development will help align the economic vision with the goal of 'Viksit Bharat'. Ritika Loganey Gupta, Partner and GCC, Tax Leader, stated, "The incentives announced in the 2024 Budget to upskill 20 lakh (2 million) youth over the next five years, through partnerships with state governments and industry stakeholders, are set to bolster the talent base that GCCs can tap into. This strategic move is expected to enhance India's attractiveness as a destination for GCCs by ensuring a steady pipeline of skilled professionals."
The government launched the Credit Guarantee Scheme in the Budget 2024, as part of which term loans would be provided up to Rs 100 crore without any collateral requirement. Experts said that this scheme will increase the lending opportunities for banks and also help improve credit availability for MSMEs.
Rajan Pental, ED, YES Bank, noted, "The enhancement of Mudra loan limits to Rs 20 lakh and the provision for continued credit support during periods of stress are designed to stabilize borrowers and reduce the likelihood of non-performing assets. These measures will help maintain operational continuity and foster growth. Meanwhile, SIDBI's expansion to cover 168 major MSME clusters will broaden credit access and strengthen financial inclusion."
Debopam Chaudhuri, Chief Economist, Piramal Group, applauded the government in attempting to achieve inclusive growth along with fiscal consolidation. "It is impressive to note that despite political considerations, the Finance Ministry delivered a largely zero sum budget, with the exchequer rising by a mere Rs 50,000 crores (entirely revenue expenses), compared to Interim budget estimates. At the same time, revenue receipt estimate in FY25 rose by Rs 1.24 lakh crores, more than subsuming the rise in expenditure. This is an indication of deft financial planning aimed at inclusive growth with right amount of populism, which should be acknowledged by the bond market and hopefully sovereign rating agencies," the economist noted.
Background
Union Budget 2024 Highlights: Finance Minister Nirmala Sitharaman presented her seventh consecutive Budget on July 23, 2024. The Budget was based on nine themes, namely, agriculture, employment, inclusive development, manufacturing and services, urban development, energy, infrastructure, innovation, R&D, and nexgen reforms.
Regarding the fiscal deficit, the FM outlined a target of 4.9 per cent of the GDP for the 2024-25 fiscal year (FY25), and 4.5 per cent for the following fiscal year.
The government set a Budget Estimate of Rs 32.07 lakh crore for the receipts other than borrowing, with net tax for the fiscal year estimated at Rs 25.83 lakh crore. The gross market borrowing for FY25 are projected at Rs 14.01 lakh crore, while net market borrowing for the period is estimated at Rs 11.63 lakh crore.
Amongst the ministries, the Defence Ministry received the highest allocation of Rs 6.21 lakh crore or 12.9 per cent of the overall bduget of the fiscal year. The Border Roads Organisation also received a 30 per cent hike in the allocation at Rs 6,500 crore in the Budget.
Further, amongst the major changes, the Budget introduced changes in the slabs for the new tax regime and raised the standard deduction limit in the new regime. Sitharaman said that in order to simplify taxation, the tax rate on STCG and LTCG has been hiked to 20 per cent and 12.5 per cent respectively.
Angel tax was completely abolished in the Budget. The government allocated Rs 11.1 lakh crore towards capital expenditure allocation for infrastructure.
The stock market on Tuesday ended on a marginally lower note as the investors expressed their disappointment with the increase in taxes on capital gains. The BSE Sensex plunged more than 1,200 points during the day to end trading at 80,429, inching lower by 73 points, while the NSE Nifty tanked over 400 points during intraday, however, it settled 30 points lower at 24,479.
Sitharaman also launched a PM's Package involving five schemes focused on boosting employment opportunities and skill development in the country.
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