Union Budget 2024: Is it a Growth-Driven Budget Or Not?

FM Nirmala Sitharaman announced the Modi 3.0 Union Budget on 23 July 2024. This Budget does not seem very supportive to the financial market participants. However, this Budget has kept 9 priorities for generating ample opportunities for all. 

These include productivity and resilience in agriculture, employment and skilling, inclusive HRD and social justice, manufacturing and services, urban development, energy security, infra, innovation and R&D and next-generation reforms. This focuses on job creation and boosting consumption, potentially benefiting consumer goods, real estate, and auto sectors.

Also Read | Union Budget 2024-25: Towards a Resilient and Prosperous India

Union Budget Estimates for Financial Year 2025 

• Fiscal deficit estimate lowered to 4.9% of GDP from 5.1% in the interim Budget.

• FM aims to reach a fiscal deficit of below 4.5% by FY26.

• Market borrowing decreased to Rs 14.01 lakh crore from Rs 15.43 lakh crore for FY24.

• Receipts for FY25 were seen at Rs 32.07 lakh crore.

• The expenditure for FY25 is seen at Rs 48.21 lakh crore.

New Income Tax slab Announced in Union Budget 2024

Key Takeaways From the Union Budget 2024

Capital Expenditure: For the financial year 2025, the government has retained Rs 11.11 lakh crore for capital expenditure, which amounts to 3.4% of India's Gross Domestic Product (GDP). 

Capital gains tax: FM said long-term capital gains on all financial and non-financial assets will attract a tax rate of 12.5% from 10% earlier. Meanwhile, short-term capital gains tax has been increased to 20% from 15% earlier. The exemption limit for capital gains will also be set at Rs 1.25 lakh per year.

Custom Duty: The FM stated that the Indian mobile industry has matured and proposed reducing the Basic Customs Duty (BCD) on mobile phones, mobile PCDA, and mobile charges to 15%. The customs duty tax on Gold and silver will be reduced to 6%, and platinum to 6.4%. BCD will increase from 10% to 15% on printed circuit board assemblies on specific telecom equipment. FM exempts customs duties on 25 critical minerals and lowers BCD for two of them.

Futures and Options Segment: FM declared raising the Security Transaction Tax (STT) rate from 0.01% to 0.02%. So, after the implementation of this Budget, F&O traders had to pay 0.02% SST. Market participants reacted negatively to this decision, and Nifty and Sensex showed a sudden decline.

Agriculture and Rural Development: The Agriculture and allied sector received Rs 1.52 lakh crore. A comprehensive review of agricultural research will be undertaken to improve productivity and develop climate-resilient varieties. Rs 2.66 lakh crore will be allocated for rural development initiatives. An additional initiative will be taken to introduce one crore farmers to natural farming over two years.

Infrastructure: An additional Rs 26,000 crore will be allocated to road connectivity projects.

Affordable Housing: Rs10 lakh crore will be invested to address the housing needs of 1 crore urban poor and middle-class families. The PM Surya Ghar Muft Bijli Yojana will install rooftop solar panels for one crore households.

Mudra Loans: The limit for Mudra loans will be increased to Rs 20 lakh from Rs 10 lakh for those who have previously availed and repaid their loans.

Higher Education Loans: Financial support for loans up to Rs 10 lakh for higher education will be provided, with the government issuing e-vouchers directly to 1 lakh students annually, including a 3% interest subsidy.

MSME: A new scheme will facilitate term loans for MSMEs to purchase machinery and equipment without collateral. A guarantee fund of up to Rs 100 crore will be introduced to support credit guarantees for MSMEs in the manufacturing sector. FM also announced a technology support package for MSMEs and said that SIDBI will open 24 new branches to serve MSME clusters.

Also Read | Interim Budget 2024-25: Towards Economic Resilience and Viksit Bharat Vision