Budget 2024-25: Aiming Inclusive Growth and Economic Stability

Budget 2024-25: Aiming Inclusive Growth and Economic Stability

An effective budget is essential for a prosperous economy for any country. India is the world's 5th largest economy by nominal GDP. The United States, China, Japan, and Germany hold the top four positions. India has experienced significant economic growth in recent years, driven by its large and diverse economy, a burgeoning middle class, and a robust services sector. In the third term of its rule the BJP government’s new budget blueprint was made public by Finance Minister Nirmala Sitharaman on 23 July. Describing the Union Budget 2024-2025, Sitharaman outlined a comprehensive strategy aimed at driving economic growth, enhancing social welfare, and fostering inclusive development.

Similarly on July 25, 2024, the newly formed Mohan Charan Majhi government also unveiled a robust budget of Rs 2.65 trillion for the fiscal year 2024-25, reflecting a 15% increase from the previous year. Presented by Chief Minister Majhi himself, who also oversees the finance portfolio, the budget prioritises agriculture, irrigation, and women's empowerment. 

Key Notes of The Union Budget 2024-25:

Focusing on employment, skilling, support for MSMEs, and the middle class, this budget also has a significant emphasis on agricultural productivity, rural development, and women's empowerment. Now let’s overlook the key notes below.

-Inflation Control and Economic Stability

Despite global economic uncertainties, India’s economic growth remains robust, with inflation moving towards the 4% target. Core inflation (non-food, non-fuel) stands at 3.1%, with measures being taken to ensure adequate supply of perishable goods.

-Employment and Skilling Initiatives

A central element of the budget is the Prime Minister’s package of five schemes and initiatives, with an outlay of ₹2 lakh crore aimed at creating employment and skilling opportunities for 4.1 crore youth over the next five years. This includes the allocation of ₹1.48 lakh crore for education, employment, and skilling in the current year.

-Agricultural Productivity and Natural Farming

To boost agricultural productivity and resilience, the government will release 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops. Over the next two years, 1 crore farmers will be introduced to natural farming practices, supported by certification and branding initiatives. Additionally, ₹1.52 lakh crore has been allocated for the agriculture and allied sectors.

-Rural and Regional Development

The budget allocates ₹2.66 lakh crore for rural development, including rural infrastructure. The "Purvodaya" initiative aims to foster comprehensive development in the eastern region, covering Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, focusing on human resource development, infrastructure, and economic opportunities.

-Women's Empowerment

A significant allocation of over ₹3 lakh crore has been made for schemes benefiting women and girls, promoting women-led development. This includes initiatives to increase women's workforce participation through the establishment of working women hostels and creches.

-Support for MSMEs

The budget provides targeted support for MSMEs, including enhancing the Mudra loan limit from ₹10 lakh to ₹20 lakh. A self-financing guarantee fund will offer guarantee cover up to ₹100 crore for MSME applicants. Additionally, financial support will be provided for setting up food irradiation units and food quality testing labs to enhance MSME capabilities in the food sector.

-Urban Development and Housing

Under PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore. This includes central assistance of ₹2.2 lakh crore over the next five years. The budget also promotes water supply, sewage treatment, and solid waste management projects in partnership with state governments and multilateral development banks.

-Energy Security and Infrastructure

The PM Surya Ghar Muft Bijli Yojana aims to provide free electricity up to 300 units per month through rooftop solar plants, with over 1.28 crore registrations and 14 lakh applications so far. Significant investment in infrastructure continues, with ₹11.11 lakh crore allocated for capital expenditure this year, equivalent to 3.4% of GDP. Phase IV of PMGSY will provide all-weather connectivity to 25,000 rural habitations.

-Innovation and Research

The budget emphasises innovation and research, with the establishment of the Anusandhan National Research Fund and a ₹1,000 crore venture capital fund to expand the space economy by five times over the next decade.

-Tax Reforms and Reliefs

The budget offers major tax reliefs to 4 crore salaried individuals and pensioners. The standard deduction has been increased from ₹50,000 to ₹75,000, and the deduction on family pension has been raised from ₹15,000 to ₹25,000. Corporate tax on foreign companies has been reduced from 40% to 35%, and angel tax for all classes of investors has been abolished to boost startups and investments.

-Customs Duty Revisions

Customs duties on several items have been revised to support domestic manufacturing and reduce the cost of essential goods. Notable reductions include duties on X-ray panels, mobile phones, and precious metals like gold and silver.

Adding more insights to the Union Budget 2024-25, Here is what the senior CA and Principal Partner of SRB & Associates, Rajib Sekhar Sahoo says.

 -4.1 Crore Jobs Over The Next Five Years

The union budget is appreciable. It has focused on the fiscal deficit and fiscal consolidation which has come down to 4.9 from 5.8, which is a great sign. Later it was a challenge for the govt. to create more employment opportunities. So the Indian government's focus on job creation in the Union Budget 2024-2025 includes new schemes, increased funds for skill development, and a plan to create 4.1 crore jobs over the next five years. To support this ambitious goal, ₹2 lakh crore has been allocated. A significant portion of the budget, ₹1.48 crore, is designated for skilling initiatives, with the objective of training 20 lakh youth over the next five years. These 20 lakh interns will get ₹5000 as incentives.

-Credit guarantee schemes 

Special attention has been given to MSMEs and the manufacturing sector innovative measures will be introduced, like new Public Sector Bank credit assessments, increased MUDRA loans, stress-period credit support, a Credit Guarantee Scheme, expanded SIDBI branches among others. The government has introduced credit guarantee schemes and term loans for machinery purchases. In addition, technology support packages will also be available for MSMEs. Small Industries Development Bank of India (SIDBI) will open 24 new branches to serve the MSME clusters.

-109 High-Yielding and Climate-Resilient Varieties

Maintaining that enhancing productivity and resilience in agriculture is her priority, ₹1.52 lakh crore has been allocated for farming and allied sectors. However, fertiliser and food subsidies were decreased, inviting flak from farmer organisations. Centre will review the agriculture research set-up to bring focus on raising productivity and developing climate-resilient varieties. New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers.

-A Reformist Budget
The budget provides an allocation of ₹2.66 lakh crore for rural development, including rural infrastructure projects. This allocation aims to enhance the quality of life in rural areas through improved connectivity, healthcare, education, and economic opportunities.which will make the rural areas of the country more self-sufficient.

Startups are part of a huge segment to help the economy of a nation. Angel tax has been removed for the startups, which was confusing and discouraging the startup owners while selling their units or diluting the shares. So it’ll definitely help them for sure.

Inflation has become a big hurdle in recent days, so the central government is taking steps to reduce the cost of the basic daily needs of the common citizens. Like the finance reform process by the present government by BJP has started during the period of Arun Jaitley, this year also this is a reformist budget. 

We definitely wished for more relaxation in the tax for the middle class. Although it has not reached our high expectations, it definitely has certain beneficial features for them and has relaxations too. For the income tax simplification in terms of income tax assessment and capital gains will definitely help to get more resources and taxpayers can easily pay their taxes. So overall this is a good budget and I wish it will definitely help our GDP to grow by 6.5-7.5%. Which will help our nation for sure. There are plans for more resources to come, more foreign direct investment to come and many more in this budget. So yes it's a good sign for our nation.

-Financial Literacy  & Investors’ Education

As per the reports we have with us, the financial literacy and investors' education are not sufficient . I believe we should work on it more and spread more awareness among the citizens. Without financial literacy it’ll be difficult for any of us to survive in the modern era. The various government and non government organisations are working on it right now. There have also been training sensations being organised in schools these days. It should be intensified more.

CA Pradip Kumar Sahoo has a different take on the Union Budget. Here is what he has highlighted:

-Challenges For The Housing Sector

The Union Budget 2024 is well-balanced and aligns closely with the election manifesto. However, it poses challenges for the housing sector due to the removal of indexation benefits and the lack of deductions for interest and principal amounts on housing loans. The insurance sector also faces setbacks as taxpayers are discouraged by the absence of Chapter VI deductions and the impact of GST on insurance.

-Regional Development and Tourism Emphasis

The budget also addresses regional development with a special package for eastern states, supporting infrastructure projects such as roads, airports, medical colleges, and power plants. This aligns with Prime Minister Narendra Modi's vision of "Purbodaya ki Vikas mein Desh ki Vikas." In Odisha, tourism is highlighted as a new source of income generation, contributing to both direct and indirect employment and boosting the national economy.

-Tax Reforms and Simplified Taxation

On individual income tax, the budget introduces a higher standard deduction and expanded tax slabs under the new simplified tax regime, aiming to boost household consumption and encourage adoption of the new tax system. The abolition of the angel tax is a progressive step, expected to stimulate new investments in the startup sector. Overall, the incentives in the new regime aim to transition taxpayers smoothly to the simplified taxation system, fostering economic growth and resilience.

A lecturer by profession Sasmita Mohapatra applauds for the emphasis on women's empowerment and the significant allocation towards health and education. She said, “The new budget appears promising for creating a supportive environment for working women and enhancing healthcare facilities, especially in rural areas."

Rakesh Kumar Sahoo, an independent business owner, feels the budget’s focusing on MSMEs and the removal of the angel tax are huge positives. “The increased Mudra loan limit and credit guarantee schemes will provide much-needed support for scaling our business operations," he added.

Anita Mohanty, an architect, is concerned about the indexation. She said, "The housing sector faces significant challenges due to the removal of indexation benefits and the lack of deductions on housing loans. This could deter middle-class families from investing in new homes and negatively impact the real estate market."

"The introduction of higher standard deductions and revised tax slabs will provide relief to pensioners and salaried individuals. It's a welcome change that could lead to higher disposable income for many households." stated Shyam Sundar Das, a retired govt. employee.

For Harshbardhan Pattnaik, a private coaching centre owner, the allocation for education and skilling initiatives is encouraging. At the same time he said, “The budget falls short on addressing the immediate needs of public education infrastructure. More investment is required to improve effective manpower and other necessary facilities in government schools."

Odisha Budget 2024-25 Fiscal, Around 15% More Than Previous

Just after one day of the Union budget announcement the newly formed Odisha government  presented a Rs 2.65 lakh crore budget for the 2024-25 fiscal in the state assembly on July 25, 2024. The Chief Minister Mohan Charan Majhi, who also holds the finance portfolio, presented the BJP government's maiden budget with a focus on agriculture and irrigation. The size of the budget for the current financial year was around 15 per cent more than the budgetary estimate of Rs 2.30 lakh crore for the 2023-24 fiscal.

-Significant Agricultural and Women's Empowerment Investments

A significant allocation of Rs 33,919 crore is directed towards agriculture, marking a 36% increase from the prior year. Women’s empowerment is bolstered by the Rs 10,000 crore 'Subhadra' scheme, a financial assistance program specifically for women. Farmers are further supported with Rs 5,000 crore allocated to the 'Samrudha Krushak Yojana' and Rs 1,935 crore for the new 'CM Kisan' scheme. In addition, Rs 3,900 crore is designated for Disaster Risk Management Funds.

-Inclusive Development and Scheme Integration

Emphasising inclusive development, the budget addresses sectors such as industries, health, education, and services, reflecting input from 12,000 stakeholders to ensure it meets public needs. Majhi announced the renaming and modification of several existing schemes, including KALIA, 'Biju Swasthya Kalyan Yojana' (BSKY), and 'Biju Pucca Ghar Yojana' (BPGY). The state also plans to integrate Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) with the state’s health assurance scheme, proposing an outlay of Rs 500 crore for AB-PMJAY and Rs 3,056 crore for the state sector scheme.

-Major Allocations for Infrastructure and Development

Other notable allocations in the budget include Rs 1,000 crore for the Bhubaneswar Metro Rail project and Rs 918 crore for a new city development program. A land bank scheme receives Rs 200 crore, while railway projects are allocated Rs 600 crore. Road development initiatives are supported with Rs 6,180 crore. Additionally, Rs 500 crore is earmarked for the Shree Jagannath Temple Administration (SJTA), Rs 200 crore for 'Odia Asmita' (pride), Rs 72 crore for the 'Mukhya Mantri Kalakara Sahayata Yojana' for artists, and Rs 15 crore for the conservation and protection of monuments.

Senior Tax Consultant, Ghanasyam Pati has shared a comprehensive insight into this newly made budget of Odisha. Here is what he has to say on this.

-Focusing Women's Empowerment

In the budget presented for the financial year 2024-25, issues like agriculture, irrigation, sports, and women empowerment have been given importance. Starting with the Subhadra Yojana for women, the announcement of the creation of 25 lakh didis by 2027 will lead to women's empowerment.

-Agricultural and Sports Boost

Similarly, the Prosperous Farmers Scheme and expenditure on irrigation development will promote agricultural development. Expenditure on sports has also increased by 8 times. It includes an indoor stadium, a hockey training centre, and a regional sports complex.

-Skill Development Investment

There is also expenditure on skill development and employment generation. However, there does not seem to be any special provision in the budget for increasing the state's income. Some of the schemes have been given new names and therefore cost more.

-Neglected Sectors

Higher education, development of public education, development of health infrastructure, etc. seem to be neglected in the budget. While more emphasis was needed on industrialization, social welfare, and encouraging investment, there was a need for more expenditure in the budget for urban and rural development.

Adding more to it Omm Pratik Patra, an Advocate from Odisha High Court said, “The Odisha Budget 2024-25 shows a significant increase from last year, focusing heavily on infrastructure, social welfare, and economic growth. Key allocations include road development, health under Gopabandhu Jana Arogya Yojana, and the new Subhadra Yojana. There are notable investments in education for Samagra Shiksha, and in agriculture for the Samrudha Krushak Yojana. So this budget seems well-rounded, targeting critical areas for comprehensive development. The increased focus on infrastructure and social welfare could significantly improve the quality of life and economic prospects in Odisha. However, effective implementation will be key to realising these benefits.”

Amrit Bhoi, a small business owner, feels despite the Odisha Budget 2024-25's increased focus on agriculture and infrastructure, it appears to neglect crucial aspects such as industrial development and support for small businesses. “The lack of targeted measures to boost industrial growth and provide relief for struggling small enterprises could hinder overall economic progress and job creation in the state,” he concluded.