Budget 2024-25: Job push, tax relief & coalition payback
Vijay C Roy
New Delhi, July 23
Tax relief for the salaried middle class, job boost through a Rs 2 lakh crore central outlay, incentives for small industry and a generous allocation for housing, agriculture and rural roads are the hallmarks of Modi 3.0’s maiden Budget presented by Finance Minister Nirmala Sitharaman today.
- Editorial: Job-oriented budget
Under pressure from coalition partners JD(U) and TDP for a special status or package for Bihar and Andhra Pradesh, the Modi government announced a spending splurge for the two states. Bihar has been allocated Rs 60,000 crore for infrastructure projects, while Andhra Pradesh has been given Rs 15,000 crore.
The FM mentioned “poor, youth, farmers and women” — sections Prime Minister Narendra Modi has routinely flagged as the pillars of Viksit Bharat — as the core of the Budget which, she said, was themed on four focus areas of employment, skilling, MSMEs and the middle class. Describing India’s economic growth as the shining exception amid global uncertainties, the FM announced the Prime Minister’s package of schemes to facilitate employment, skilling and other opportunities for 4.1 crore youth over five years. The schemes will have a central outlay of Rs 2 lakh crore. The FM also announced Rs 1.48 lakh crore for education, employment and skilling.
- Rs 2L crore allocated for creation of 4.1 crore jobs, 1 crore youth to get internship in top 500 firms over five years
- Employees’ standard deduction increased by 50% to Rs 75,000; tax slabs under new regime tweaked
- Bonanza for allies; Rs 60K-crore outlay for Bihar’s infra, flood measures; Rs 15K crore for new Andhra capital
For core infrastructure projects, she maintained the spending at Rs 11.11 lakh crore to boost growth. “A significant investment in infrastructure has had a strong multiplier effect on the economy…. We will endeavour to maintain strong fiscal support for infrastructure over the next five years. This year, I have provided Rs 11,11,111 crore for capital expenditure, 3.4 per cent of our GDP,” the FM said.
To boost investments, the FM abolished the angel tax for all classes of investors in startups (this tax was imposed in 2012 on the funding startups received from angel investors), besides cutting the customs duty on mobile phones, gold, silver and platinum jewellery and high-end cancer medicines. She, however, raised the securities transaction tax on futures and options of securities, which led to tanking of the stock market.
Also, the long-term capital gains tax on all financial and non-financial assets has been hiked from 10 per cent to 12.5 per cent while the short-term capital gains tax on certain assets has been hiked from 15 per cent to 20 per cent, which will impact short-term investors.
Propelled by a robust tax revenue buoyancy during FY 23-24, she announced that the focus now was on job creation through GDP growth by putting in more disposable income at the hands of the common man. The standard deduction for salaried employees under the new tax regime is proposed to be increased from Rs 50,000 to Rs 75,000. This would benefit taxpayers under the new tax regime, which offered lower rates of taxes but permited limited deductions and exemptions, saving up to Rs 17,500 in tax annually, she said. Similarly, the deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000. “This will provide relief to about four crore salaried individuals and pensioners under the new tax regime,” Sitharaman said.
Speaking for nearly an hour and a half in the Lok Sabha, Sitharaman listed a roadmap for pursuing nine priorities for India’s growth, including productivity and resilience in agriculture, employment opportunities, inclusive growth, urban development, energy and security, innovation and next-generation reforms.
The five schemes announced for boosting employment will focus on 4.1 crore youth over five years with a central outlay of Rs 2 lakh crore, which includes one-month wage to new entrants in all formal sectors. It also includes incentives to employees and employers for job creation in manufacturing.
With rural distress and unemployment counting as major factors for the BJP’s recent below par Lok Sabha poll performance, Sitharaman provided Rs 2.66 lakh crore for rural development.
To boost employment and skilling, the government will implement three schemes for employment-linked incentives as part of the Prime Minister’s package. It will provide one-month wage to new entrants in the workforce in all formal sectors. The direct benefit transfer of one-month salary in three instalments to first-time employees, registered with the EPFO, will be up to Rs 15,000. The eligibility limit will be a salary of Rs 1 lakh per month. The scheme is expected to benefit 210 lakh youth.
To boost job creation in manufacturing, a scheme will incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at a specified scale, directly to the employee and the employer with respect to their EPFO contribution in the first four years of employment. The scheme is expected to benefit 30 lakh youth and their employers. The government will also ensure higher participation of women in the workforce. The Finance Minister said as per the fifth scheme under the Prime Minister’s package, the government will launch a comprehensive scheme for providing internship opportunities in 500 top companies to one crore youth in five years.
On the New Pension Scheme (NPS), the Finance Minister said the committee to review the NPS had made considerable progress and relevant issues would be addressed while maintaining fiscal prudence to protect the common citizens.
The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for entrepreneurs who have availed of and successfully repaid previous loans under the ‘Tarun’ category. For expanding the space economy by five times in the next 10 years, a venture capital fund of Rs 1,000 crore will be set up.
Step towards being 3rd-largest economy
The Budget will act as a catalyst in making India the third-largest economy & will lay a solid foundation for a developed India. — Narendra Modi, PM
India’s growth shining exception in world
India’s economic growth continues to be the shining exception in a world gripped by policy uncertainties… will remain so in the years ahead. — Nirmala Sitharaman, Finance Minister
Cut-paste of Congress poll manifesto
It’s kursi bachao Budget. Appease allies at cost of other states. Appease cronies… no relief for the common man. Copy of Congress manifesto. — Rahul Gandhi, Cong MP
