Low inflation, robust growth in focus of Union Budget 2024-25

New Delhi, July 23: Minister of Finance and Corporate Affairs Nirmala Sitharaman Tuesday said India’s economic growth stands out as a bright exception in a world grappling with policy uncertainties.

Presenting the Union Budget 2024-25 in Parliament, she highlighted that India's inflation remains low and stable, and is moving towards the 4 percent target.

Sitharaman said that the core inflation (non-food, non-fuel) was currently at 3.1 percent, with measures in place to ensure an adequate supply of perishable goods.

The budget targets four key groups: the poor, women, youth, and farmers.

Emphasising employment, skilling, MSMEs, and the middle class, the Finance Minister announced a Prime Minister’s package of five schemes aimed at providing employment and opportunities to 4.10 crore youth over 5 years, with a central outlay of Rs 2 lakh crore.

This year, Rs 1.48 lakh crore has been allocated for education, employment, and skilling.

BUDGET ESTIMATES 2024-25

The total receipts, excluding borrowings, are estimated at Rs 32.07 lakh crore, with total expenditure at Rs 48.21 lakh crore.

Net tax receipts are estimated at Rs 25.83 lakh crore, and the fiscal deficit is projected at 4.9 percent of GDP.

Gross and net market borrowings through dated securities are estimated at Rs 14.01 lakh crore and Rs 11.63 lakh crore.

The government aims to reduce the deficit below 4.5 percent next year, continuing the fiscal consolidation path announced in 2021.

BUDGET PRIORITIES

The budget outlines nine priorities aimed at generating ample opportunities for all:

Priority 1: Agricultural Productivity and Resilience

The government would review the agriculture research setup to enhance productivity, releasing 109 high-yielding, climate-resilient crop varieties.

A total of 1 crore farmers would be introduced to natural farming, supported by certification and branding.

Additionally, 10,000 bio-input resource centres would be established.

The government aims for self-sufficiency in pulses and oilseeds, strengthening their production, storage, and marketing.

A provision of Rs 1.52 lakh crore has been made for the agriculture and allied sectors this year.

Priority 2: Employment and Skilling

Three ‘Employment Linked Incentive’ schemes would be implemented, focusing on first-time employees and supporting both employees and employers.

To increase women’s workforce participation, working women hostels and crèches would be set up in collaboration with the industry.

A new centrally-sponsored scheme for skilling would be introduced, training 20 lakh youth over 5 years and upgrading 1000 Industrial Training Institutes (IITs).

The Model Skill Loan Scheme would be revised to facilitate loans up to Rs 7.5 lakh, benefiting 25,000 students annually.

Financial support for loans up to Rs 10 lakh for higher education in domestic institutions would be provided, with e-vouchers for annual interest subvention given to 1 lakh students each year.

Priority 3: Inclusive Human Resource Development and Social Justice

A saturation approach would be taken to implement schemes supporting craftsmen, artisans, self-help groups, scheduled castes, scheduled tribes, women entrepreneurs, and street vendors.

The Purvodaya plan will focus on developing the eastern region, covering Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, aiming to make it an engine for achieving ‘Viksit Bharat’.

The Pradhan Mantri Janjatiya Unnat Gram Abhiyan would improve the socio-economic condition of tribal communities, covering 63,000 villages and benefiting 5 crore tribal people.

More than 100 branches of India Post Payment Bank would be set up in the North East region.

A provision of Rs 2.66 lakh crore has been made for rural development, including rural infrastructure.

Priority 4: Manufacturing and Services

Special attention would be given to MSMEs and manufacturing, especially labour-intensive manufacturing.

A self-financing guarantee fund would provide guarantee covers up to Rs 100 crore per applicant.

Public sector banks would enhance their in-house capability to assess MSMEs for credit.

The limit of Mudra loans would be increased to Rs 20 lakh for entrepreneurs who have successfully repaid previous loans.

Financial support would be provided for setting up 50 multi-product food irradiation units and 100 food quality and safety testing labs in the MSME sector.

E-commerce export hubs would be established to enable MSMEs and traditional artisans to sell their products internationally.

The government would launch a comprehensive scheme providing internship opportunities in 500 top companies to 1 crore youth over five years.

Priority 5: Urban Development

The housing needs of 1 crore urban poor and middle-class families will be addressed under the Urban Housing under the PM Awas Yojana Urban 2.0 with an investment of Rs 10 lakh crore including Rs 2.2 lakh crore in central assistance over the next five years.

With State governments and multilateral development banks, the government will promote water supply, sewage treatment, and solid waste management projects in 100 large cities through bankable projects.

Under the PM SVANidhi the government would build on the success of the PM SVANidhi scheme and envisions supporting the development of 100 weekly ‘haats’ or street food hubs in select cities each year for the next five years.

Priority 6: Energy Security

In line with the interim budget announcement, the PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants, enabling 1 crore households to receive up to 300 units of free electricity each month.

The scheme has seen over 1.28 crore registrations and 14 lakh applications.

Nuclear energy will also play a significant role in India's energy mix for achieving 'Viksit Bharat'.

Priority 7: Infrastructure

The finance minister emphasised the strong multiplier effect of infrastructure investment on the economy. The government would maintain robust fiscal support for infrastructure over the next five years, balancing other priorities and fiscal consolidation.

This year, Rs 11,11,111 crore has been allocated for capital expenditure, accounting for 3.4 percent of GDP.

Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will be launched to provide all-weather connectivity to 25,000 rural habitations, driven by population growth.

Through the Accelerated Irrigation Benefit Programme and other sources, the government will support projects costing Rs 11,500 crore under the Irrigation and Flood Mitigation in Bihar, including the Kosi-Mechi intra-state link and 20 other schemes for barrages, river pollution abatement, and irrigation.

Assistance will also be provided to Assam, Himachal Pradesh, Uttarakhand, and Sikkim for flood management and landslide projects.

Priority 8: Innovation, Research and Development

The government would operationalise the Anusandhan National Research Fund for basic research and prototype development and establish a mechanism to spur private sector-driven research and innovation at a commercial scale, with a financing pool of Rs 1 lakh crore.

Under the space economy, the government aims to expand the space economy fivefold in the next decade for which a venture capital fund of Rs 1,000 crore would be set up.

Priority 9: Next Generation Reforms

The government would develop an Economic Policy Framework to outline the approach to economic development and set the scope for next-generation reforms to facilitate employment opportunities and sustain high growth.

Under the labour reforms, a wide array of services for employment and skilling would be integrated into a comprehensive system.

The e-shram portal would be integrated with other portals, and the Shram Suvidha and Samadhan portals would be revamped to enhance ease of compliance for industry and trade.

A taxonomy for climate finance would be developed to enhance capital availability for climate adaptation and mitigation.

Rules and regulations for Foreign Direct Investment and Overseas Investments would be simplified to facilitate foreign investments, prioritise opportunities, and promote the use of the Indian Rupee for overseas investments.

The NPS-Vatsalya plan would allow parents and guardians to contribute to minors' pension plans, which would be converted into normal NPS accounts upon reaching adulthood.

The committee reviewing the New Pension Scheme (NPS) has made considerable progress, and a solution would be developed to address issues while maintaining fiscal prudence.