Union Budget 2024: Disappointing Measures for Economic Challenges
Sebencapital
Published
24/07/24
In her first budget presentation following the general elections, Finance Minister Nirmala Sitharaman outlined several significant measures in the Union Budget 2024. This year's budget, marking Sitharaman’s seventh consecutive budget, aimed to address various sectors and demographics with a mix of tax reforms, infrastructure investments, and employment generation schemes.
Key Allocations and Reforms
Employment Generation: The budget allocated a substantial ₹2 lakh crore over the next five years for employment generation schemes. This initiative seeks to create job opportunities and alleviate unemployment concerns, which have been a pressing issue in recent times.
Tax Reforms: Significant changes were introduced in tax policies:
Abolition of Angel Tax: The controversial 'angel tax' on startup investments was removed, simplifying the investment process and potentially boosting the startup ecosystem.
Customs Duty Adjustments: Customs duties on mobile phones and gold were reduced, while the increase in securities transaction tax (STT) on futures and options led to a temporary decline in stock markets.
Capital Gains Tax: The budget proposed simplification in capital gains tax, with long-term capital gains (LTCG) tax rate reduced to 12.5%, aiming to encourage investment in markets.
Infrastructure Investments:
Bihar: ₹60,000 crore was allocated for infrastructure projects, including expressways, power plants, heritage corridors, and new airports. This move is expected to bolster development in Bihar ahead of the upcoming assembly elections.
Andhra Pradesh: The state received ₹15,000 crore in financial aid, focusing on infrastructure and the Polavaram project, with an emphasis on economic development and state capital needs.
Middle-Class Relief: The standard deduction was increased by 50% to ₹75,000. Tax slabs were also adjusted for those opting for the new income tax regime, providing some relief to the middle class.
Departmental Allocations:
Drinking Water and Sanitation: The allocation for the Department of Drinking Water and Sanitation saw a marginal increase of 0.5%, with a significant portion directed towards the Jal Jeevan Mission (JJM) to ensure functional tap connections in rural households.
Defence: The defence sector received ₹6.21 lakh crore, a notable increase from the previous year’s allocation, with a focus on capital outlay and domestic procurement to enhance defense capabilities.
Goods and Services:
Costlier Goods: Customs duties were increased on several items, including telecom equipment, plastic goods, and ammonium nitrate.
Cheaper Goods: Duties were reduced on essential items such as cancer medicines, mobile phones, precious metals, and fish feed.
Political and Public Reactions
The budget received mixed reactions from various political parties and stakeholders:
Opposition Criticisms:
Left Parties: Criticized the budget for failing to address unemployment and inflation, accusing it of concealing government shortcomings. CPI(M) General Secretary Sitaram Yechury termed it a "contractionary" budget that does not address the pressing economic issues.
Congress Leaders: Rahul Gandhi labeled the budget as a "Kursi Bachao Budget," suggesting it prioritizes political survival over genuine welfare. Mallikarjun Kharge, Congress President, called it a "copycat" budget aimed at protecting the Modi government rather than promoting national progress.
State Leaders:
West Bengal: Chief Minister Mamata Banerjee criticized the budget as "directionless" and "anti-people," highlighting that it ignored the specific needs of West Bengal.
Kerala: Finance Minister K N Balagopal denounced the budget as a "political exercise," arguing it fails to address Kerala's needs and undermines cooperative federalism.
Industry Reactions:
Startups and Venture Capital: The removal of angel tax was welcomed by venture capitalists, who see it as a step towards simplifying investments in startups and enhancing the sector’s growth.
MSMEs: The budget’s focus on credit guarantee schemes and Mudra loans was seen as a positive development for the MSME sector, fostering growth and innovation.
Public Services:
Civil Aviation: The budget allocated ₹2,357 crore to the Civil Aviation Ministry, a decrease from the previous year’s budget, with specific funds set aside for regional connectivity and infrastructure development.
Disability Affairs: The department received a modest increase in its budget, with a significant portion dedicated to the National Program for the Welfare of Persons with Disabilities.
Summary
The Union Budget 2024 aimed to address a broad range of economic, social, and infrastructural needs, with a significant focus on job creation, tax reforms, and regional development. While the budget’s measures were designed to stimulate economic growth and provide relief to various sectors, the reactions from opposition parties and state leaders indicate substantial criticism regarding its effectiveness and political motivations. As the budget's implications unfold, it will be crucial to observe its impact on the nation’s economic landscape and the government’s political standing.
Techpreneur and adept trader, Sauravsingh Tomar seamlessly blends the worlds of technology and finance. With rich experience in Forex and Stock markets, he's not only a trading maven but also a pioneer in innovative digital solutions. Beyond charts and code, Sauravsingh is a passionate mentor, guiding many towards financial and technological success. In his downtime, he's often found exploring new places or immersed in a compelling read.