It is a coalition budget with promise of job creation through the corporate a tall task and placate the contentious allies with a large package and opening up the states to multilateral bank fundings, that can become a quagmire.
Politics and coalition have a message of June 4, 2024 becoming the benchmark for at least a visible change in approach to the economy. Inflation control has emerged as a priority now. The government claims inflation has moderated, the RBI says it remains at 5.1 percent or above.
Changes in the new income tax rates are welcome but it has also seen the bracket of Rs 20 lakh at the 30 percent rate getting at Rs 15 lakh which was under a lower slab.
The changes in capital gains tax would cause more outgo in taxes as the process of indexation beyond 2001 has been done away. It could lead to many deals in cash as outgo between the old rates and new would be heavier. The government to plug it should better continue with the system of indexation.
Agriculture allocation of Rs 1.52 lakh crore is inadequate. There is a large sum of Rs 1.64 lakh crore allocated separately for the free food programme to 81 crore people. The growth rate of agriculture has come down to 1.4 percent from 4.4 percent. The fisheries sector has grown 8.9 percent, a success of the PM’s Matsya Sampada programme. Gold tax cut to 6 percent from 15 percent is good in pre-wedding season. Gold would, however, appreciate as it is becoming global currency.
Bihar and Andhra are beneficiaries of the largesse and a boom for the construction lobbies in these states.
Amaravati to be built will have many perks for the Andhra construction and other industries and definitely boost the clout of chief minister N Chandrababu Naidu. There are at least two major industrial corridors
envisaged in the state. It is supposedly to spur industrial activities.
Multi-dimensional construction of bridges, other infra and turning Nalanda and Gaya from pilgrim destination to tourist destinations would see many destructions of old and may be ancient structures as it happened in pilgrim centres of UP. Giving importance to Chief Minister Nitish Kumar, a key alliance partner of the Narendra Modi government, Union Finance Minister Nirmala Sitharaman announced to sanction Rs 58,900 crore to Bihar in the 2024 Union Budget.
Review of Gaya and Nalanda, which have basic infrastructure developed during the last many years can definitely be improved but caution is needed so that the basics are not changed. There are proposals to have industry in Gaya. It should match ecologically and aesthetically.
Be it Andhra Pradesh or Bihar the developments should not be done just to prop up real estate prices. In some of the places in UP, this as happened and the cities have seen destruction of habitats without a compensation or payment of paltry sums. There are rumblings in states who all are in need of special care that has been given to Andhra and Bihar, who were demanding special status. But a multilateral institutional window has seemingly been opened. Sitharaman also announced provision of a 50-year-loan to the states that would have to be repaid in 2073. It is bonanza as some states may see but it a burden also on the future generation.
While the budget continues with the developed India vision built on the pillars of agriculture, employment, inclusive development, manufacturing and services, urban development, energy, infrastructure, innovation research and next gen reforms. This was the bedrock of the interim budget presented in February. Finance Secretary Somnathan stressed the point to underscore that the basic focus of the budget has not changed.
The big theme of the budget is a bouquet of jobs or employment, raised by the opposition INDIA alliance during the election campaign with an aggregate spending of Rs 2 lakh crore, aimed at incentivising companies to create jobs, and at training people to be ready for jobs, including apprenticeships, at 500 best
companies. This is to address the jobless growth that had become a problem even before NDA government took over in 2014. This is perhaps the first time a budget is focused on employment and creating employability among the youth. The Economic Survey 2023-24 highlighted issue.
The government wants to create a crore of jobs a year for the next five years or till the 2029 elections. This means each of the 500 companies, including in critical and having issues with safety like power plants, refineries, chemical, have to employ 4000 persons as trainees to be eligible to have incentives of Rs 6000 per employee. The companies would have to retain them for 12 months. The apprenticeship programme was introduced by late prime minister Indira Gandhi too. It had limited success. In an automated software-controlled operations few companies needs large workforce. Part of the expenses are to met by the Corporate Social Responsibility funds. Still employing such large numbers is not convenient for many
Though well-intended, actual beneficiaries could be far less. It is a productive response by the BJP as also to create a narrative. The government perhaps would do better to do away with Agniveerlike schemes to suit the needs of Haryana youth. Armed forces recruitment could continue as done.
Mudra scheme loans have been doubled to Rs 20 lakh. It is not being considered adequate to start a new business. Threshold requirements are high.
The farm sector has been given further stress for horticulture and 109 different kind of 32 varieties to suit the climate changes are being developed. Horticulture and vegetable production have increased to over 200 lakh tonnes each. An effort on to ensure that whether rice, wheat or vegetables should not see price fluctuations that leads to high inflation.
On fiscal side the government has adopted a cautionary attitude leading the reduction in fiscal deficit to 4.9 percent. This would also mean government would be careful in its expenses including capital expenditure of Rs 11.9 lakh crore. Instead of massive spending it would be more selective as it has done for the railways where the largest infra fund would be spent on safety and signalling issues.
Overall despite continuity from the interim budget, the finance minister has presented a budget that is different in its outlook though it may not contain inflation but aims at creating jobs and strengthening
development of the country.
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