The announcements and provisions made in the Union Budget 2024 indicate an intention to have a multiplier effect for uplifting the poor, youth, women, and farmers. Some key themes emerge out from this year.
The manufacturing sector has received a big boost aligned with the government's 'Make in India' initiative and the vision of Aatmanirbhar Bharat. For instance, allocating ₹1,000 crore in venture capital for the private space sector will help enhance research and development for commercial product development in the country. The allocation of ₹11.11 lakh crore for infrastructure development is expected to boost economic growth in the country with its multiplier effect.
The focus on job creation and long-term skill development through various Employment Linked Incentive schemes across the manufacturing and services sector government has proposed solutions to generate employment of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector. Through the initiatives earmarked for skilling the youth, the current government seems to have also set itself the long-term goal of building a 'skilled India'.
Deemed as the future workforce of the globe, the youth in India needs to be skilled on a par with international industry standards. Today, a large majority of the nation's youth remains unemployable due to lack of requisite skills. The announcement of a centrally sponsored scheme to skill 20 lakh youth over a five-year period, in collaboration with state governments and industry could help bridge this widening gap.
This year's budget has also set sights on encouraging the spirit of entrepreneurship in the country. A comprehensive review of the tax regime over the next six months to rationalise and simplify customs duty rates and proposals for relaxing GST norms to offer amnesty to businesses is a commendable step. At the same time, offering Credit Guarantee Scheme for MSMEs operating in manufacturing, can be a stepping stone to help fulfil India's goal of becoming the factory of the world. Furthermore, abolishing of the angel tax for all classes of investors in a startup is a great example of how the government aims to support India's promising startup ecosystem.
The emphasis on 'Ease of Doing Business' in India comes out very clearly with corporate tax for foreign companies reducing to 35% and efforts being made to reduce the overall compliance burden. The proposals for setting up 'Jan Vishwas Bill 2.0' to further enhancing ease of doing business, simplification of FDI and overseas investment rules are a positive step towards powering up investments across sectors.
The Union Budget 2024, balanced capital expenditure and fiscal prudence, and targets to maintain fiscal deficit target of 4.9% of GDP in FY25, this is expected to inch closer towards 4.5% goal by FY26. For India's goal of becoming the third largest economy by 2030 and a developed nation by 2047 it is essential to continuously propel growth through capital expenditure, especially in infrastructure and manufacturing and the fiscal deficit in the range of 4.5% to 5% will be the 'new normal' to spur growth.
Although, this year's budget shies away from big ticket announcements, the proposed measures present well-balanced opportunities that can be tweaked further and evolved over a period of time. By addressing key issues pertaining to development, the government has set itself on the path to driving economic growth through empowerment of its people and industries. Overall, it is designed to empower every section of the society, thereby establishing the groundwork, for achieving the nation's goal of becoming Viksit Bharat@2047.
A version of this article was published in The Economic Times on July 26 2024. The same can be read here
