The Indian Government’s New Budget 2024, presented by Finance Minister Nirmala Sitharaman, marks a pivotal moment in the country’s economic policy. The budget is a reflection of the government’s priorities, addressing both immediate needs and long-term goals. It balances fiscal prudence with growth-centric initiatives, aiming to stimulate economic recovery, generate employment, and ensure sustainable development.
Economic Context
Global and Domestic Challenges
The budget comes at a time when the global economy is navigating post-pandemic recovery, geopolitical tensions, and inflationary pressures. Domestically, India faces challenges such as unemployment, rural distress, and infrastructure deficits. The budget aims to address these issues while leveraging opportunities for economic expansion.
Growth Projections
The Economic Survey 2023-24 projected a growth rate of 6-6.5% for the upcoming fiscal year. This optimistic outlook is underpinned by robust domestic consumption, increased private investment, and favorable policy interventions.
Key Highlights
Fiscal Discipline and Revenue Generation
The budget emphasizes fiscal consolidation, targeting a fiscal deficit of 5.9% of GDP. This is a step towards achieving the medium-term goal of 4.5% by 2025-26. Revenue generation strategies include expanding the tax base, enhancing compliance, and rationalizing subsidies.
Direct and Indirect Taxes
Direct Taxes: The budget introduces measures to simplify the tax regime, offering relief to middle-class taxpayers and incentivizing savings and investments. The income tax slabs have been revised, providing higher exemptions and deductions.
Indirect Taxes: GST reforms continue with an aim to improve compliance and reduce litigation. Custom duties have been rationalized to promote domestic manufacturing and exports.
Infrastructure Development
National Infrastructure Pipeline (NIP): An outlay of ₹10 lakh crore has been announced for infrastructure projects under the NIP. This includes investments in roads, railways, ports, airports, and urban infrastructure.
Urban Development: The budget allocates funds for the Smart Cities Mission and AMRUT (Atal Mission for Rejuvenation and Urban Transformation), focusing on sustainable and inclusive urban growth.
Health and Education
Healthcare: In light of the pandemic, the health sector sees a significant boost with an allocation of ₹2.2 lakh crore. This includes funds for the PM Atmanirbhar Swasth Bharat Yojana, aimed at strengthening healthcare infrastructure and improving access to medical facilities.
Education: An allocation of ₹1.1 lakh crore underscores the government’s commitment to education. Initiatives include the establishment of new institutions, digital learning platforms, and scholarships to promote inclusivity and skill development.
Agriculture and Rural Development
Agriculture: The budget focuses on doubling farmers’ income through measures like increased MSP (Minimum Support Price), crop insurance schemes, and infrastructure development for storage and processing.
Rural Development: Programs like PMGSY (Pradhan Mantri Gram Sadak Yojana) and MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) receive substantial funding to enhance rural connectivity and employment.
Social Welfare
Women and Child Development: The budget allocates ₹30,000 crore for women-centric schemes, including Beti Bachao Beti Padhao and maternity benefits. Child development programs receive ₹20,000 crore, focusing on nutrition, education, and health.
Senior Citizens and Differently-Abled: Increased pension allocations and enhanced facilities for senior citizens and differently-abled individuals reflect the government’s commitment to social inclusivity.
Technology and Innovation
Digital India: The Digital India initiative gets a boost with an allocation of ₹50,000 crore. This includes expanding broadband connectivity, promoting digital literacy, and supporting startups.
Research and Development: The budget allocates ₹20,000 crore for R&D in critical sectors like AI, biotechnology, and space exploration. This aims to position India as a global leader in innovation.
Environmental Sustainability
Climate Action: In line with global commitments, the budget earmarks ₹1 lakh crore for climate action. This includes renewable energy projects, afforestation drives, and pollution control measures.
Sustainable Agriculture: Incentives for organic farming, efficient water usage, and renewable energy in agriculture are part of the budget’s sustainability agenda.
Sectoral Impact
Industry and Manufacturing
The budget’s focus on ‘Make in India’ is evident with incentives for domestic manufacturing. The PLI (Production-Linked Incentive) scheme has been expanded to include more sectors, aiming to boost production and exports.
MSMEs
Micro, Small, and Medium Enterprises (MSMEs) receive a significant push with a dedicated corpus of ₹15,000 crore for credit guarantees and an additional ₹10,000 crore for infrastructure development. Simplified compliance and easier access to finance are also prioritized.
Financial Sector
Banking and Insurance: Recapitalization of public sector banks and initiatives to increase insurance penetration are key highlights. The budget also proposes measures to develop the bond market and promote financial inclusion.
Capital Markets: Reforms to attract foreign investments, simplify regulatory frameworks, and enhance transparency in capital markets are included.
Tourism and Hospitality
The budget recognizes tourism as a major economic driver, with an allocation of ₹5,000 crore for the sector. This includes developing tourist circuits, promoting heritage sites, and improving infrastructure.
Transportation
Significant investments are planned for modernizing the transportation sector. Key projects include high-speed rail corridors, metro expansions, and upgrading highways and expressways.
Regional Development
North-East
Special focus is given to the North-Eastern states with an allocation of ₹50,000 crore for infrastructure, connectivity, and socio-economic development.
Jammu and Kashmir
An allocation of ₹20,000 crore aims to boost development in Jammu and Kashmir, focusing on infrastructure, tourism, and employment generation.
Aspirational Districts
The Aspirational Districts Program, targeting underdeveloped regions, receives ₹15,000 crore. This aims to bridge disparities through improved health, education, and infrastructure.
Public-Private Partnerships
The budget emphasizes the role of public-private partnerships (PPPs) in driving economic growth. Incentives for private investment in infrastructure, healthcare, and education are designed to leverage private sector efficiency and capital.
Employment Generation
Addressing unemployment is a key priority, with initiatives aimed at creating jobs across sectors. Skill development programs, startup incubation, and support for MSMEs are central to this strategy.
Challenges and Criticisms
Implementation
While the budget outlines ambitious plans, effective implementation remains a challenge. Ensuring timely execution and addressing bureaucratic hurdles are critical for achieving the desired outcomes.
Fiscal Deficit
Balancing growth-oriented spending with fiscal prudence is a delicate task. The government’s ability to manage the fiscal deficit without compromising on essential expenditures will be closely watched.
Inclusivity
Despite allocations for social welfare, ensuring that benefits reach the marginalized and vulnerable sections of society is essential. Transparent mechanisms and accountability are crucial in this regard.
Inflation
Rising inflation poses a risk to economic stability. The budget’s measures to control inflation through supply-side interventions and prudent fiscal management will be critical.
Global Uncertainties
External factors such as geopolitical tensions and global economic slowdown could impact India’s growth trajectory. The budget’s resilience to such shocks will be tested.
Conclusion
The New Budget 2024 by the Indian Government is a comprehensive effort to address the multifaceted challenges facing the economy. It balances immediate needs with long-term goals, emphasizing fiscal discipline, inclusive growth, and sustainable development. The budget’s success will depend on effective implementation and the government’s ability to navigate domestic and global uncertainties. As India strives to emerge as a global economic powerhouse, this budget lays the foundation for a resilient and inclusive growth path.
