“A budget tells us where our priorities are,” said President Eisenhower. India’s Union Budget 2024 is no different. It offers a roadmap for the country’s economic journey in the coming year.
The government has shared its spending plan for the year, and there are both good and bad things in it. The budget promises to help many people, especially the poor and young people. It also aims to grow the economy and create jobs. But there are worries about how much the government is spending and whether it can pay its debts. Let’s break down what this budget means for you.
The government has shared its spending plan for the year and there are both good and bad things in it. The budget promises to help many people, especially the poor and the youth. It also aims to grow the economy and generate employment. However, there are concerns about how much the government is spending and whether it will be able to repay its debt. Let us know about the positive and negative impacts of Budget 2024.
Positive Impacts of Budget 2024
The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, emphasizes growth and sustainability across various sectors. It aims to promote economic growth, enhance infrastructure, and support social welfare initiatives. The major positive impacts of the budget are as follows:
- PM Awas Yojana Urban 2.0: The needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore
- Pradhan Mantri Tribal Unnat Gram Abhiyan: Improvement in Socio-economic status of 63,000 tribal communities Villages benefit 5 crore tribal people.
- Internship Opportunities: Scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years. Allowance of ₹5,000 per month along with a one-time assistance of ₹6,000 through the CSR funds.
- The government plans to allocate ₹3 lakh crore for schemes benefiting women and girls, aiming to increase their participation in the workforce. This initiative supports gender equality and economic empowerment.
- The budget has a provision of ₹1.52 lakh crore for agriculture and allied sectors. The funding aims to increase productivity and resilience in agriculture, which is critical for food security and rural incomes.
- Increased funding for healthcare infrastructure will benefit the healthcare and pharmaceutical sectors. Investment in roads and urban development will also support the hospitality and tourism industries
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Economic Growth and Infrastructure
- The budget introduces credit guarantees for MSME loans up to ₹100 crore, along with increased credit assistance for small businesses. This support is vital for the growth and innovation of small enterprises, which are significant contributors to the economy.
- Mudra Loan: Limit has increased to ₹20 lakhs, currently less than ₹10 lakhs ‘Tarun’ category
- The fiscal deficit is targeted at 4.9% of GDP, down from 5.1%. This reduction reflects a commitment to maintaining fiscal stability, which can attract investments and lower capital costs for businesses.
- The budget allocates ₹11.11 lakh crore for capital expenditure, representing 3.4% of GDP. This investment in infrastructure is expected to stimulate economic activity and create jobs.
- The government plans to facilitate employment and skill development for 41 million youth over five years with a central outlay of ₹2 trillion. This initiative addresses the needs of India’s large youth population.
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Tax Relief and Business Environment
- The budget increases the standard deduction limit from ₹50,000 to ₹75,000, allowing salaried individuals to save up to ₹17,500 in taxes annually. This change will enhance disposable income and encourage consumer spending.
- Removal of angel tax is an important step to encourage investment in startups, promoting a vibrant entrepreneurial ecosystem. This is likely to attract more capital to innovative enterprises.
- The introduction of education loans up to ₹10 lakh with 3% interest subvention for students aims to make higher education more accessible. This initiative is important for talent development in the country.
- The budget promotes manufacturing through various incentives, including tax cuts for foreign companies and support for electric vehicle production. This focus is expected to increase India’s manufacturing capabilities.
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Negative Impacts of Budget 2024
An increase in tax on long-term capital gains (LTCG) from 10% as of now to 12.5% and short-term capital gains (STCG) from 15% currently to 20%.
Budget 2024 is presented as an interim budget, which generally lacks major reforms and is designed to bridge the gap until a new government is formed. This limits the scope for significant policy changes and long-term planning.
The fiscal deficit is estimated at ₹16,85,494 crore, which is 5.9% of GDP. This represents a slight decrease from previous estimates but still raises concerns about fiscal sustainability and the government’s ability to effectively manage public finances.
Total revenue expenditure is estimated at ₹36,54,657 crore, showing an increase of 3.2%. This high expenditure level may limit the funds available for development projects and infrastructure investment.
Outstanding liabilities are expected to reach 57% of GDP in 2024-25, indicating a growing debt burden. This raises alarms about the government’s long-term fiscal health and ability to finance future expenditures without increasing taxes or cutting services.
The budget maintains existing tax rates, with no new tax liabilities for individuals earning up to ₹7 lakh. While this may provide short-term relief, it does not address structural issues in the tax system that could enhance revenue generation in the long run.
Although capital expenditure is set to rise by 16.9% to ₹11,11,111 crore, critics argue that this may not be sufficient to stimulate economic growth or address infrastructure deficits adequately.
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