Union Budget 2024-25, government’s first major policy announcement post assuming office for the third term, is another leap forward towards leveraging India’s true economic potential. The Hon’ble Finance Minister has yet again displayed commendable stewardship by doing a fine balancing act. The focus on the nine priorities encompasses critical elements to sustain growth and takes care of the overarching objectives of inclusivity and sustainability.
First and foremost, the emphasis on manufacturing, especially the substantial support extended to MSMEs is welcome. MSMEs contribute significantly to India’s economy and the announced measures will effectively help address the challenges that units in this sector face in accessing finance, markets and technology. The credit guarantee fund scheme for SMEs that would offer guarantee of up to Rs 100 crore; new assessment model for SME credit by public sector banks; bank credit to SMEs in SMA account; expansion of limit for MUDRA loans to Rs 20 lakhs from Rs 10 lakh; reduction in TREDS threshold for mandatory onboarding to Rs 250 crore from Rs 500 crore, setting up of e-commerce export hubs are all very practical announcements. In fact, many of these have been the key asks that we from FICCI have been discussing with the government.
Next, with trends such as automation, digitalization disrupting the education sector and job markets, the importance given to employment and skill development was the need of the hour. The 3 new employment linked incentive scheme introduced in the budget, the new centrally sponsored scheme for skilling in collaboration with States and industry to help skilling of 20 lakh youth over 5 years and the revision of model skill loan scheme are very well placed. These reflect the comprehensive thought process of the government keeping in line with the rapidly evolving trends in the job market shaped by technological changes.
Today the country is at an important inflection point, where much work has been undertaken and the focus on next generation of reforms in terms of ensuring ease of doing business/cost of doing business will be the real game changers. In this regard, the pro-business measures with a focus on reforming factors of production strike the right chord. The announcements pertaining to a review of land administration, planning and management, land use and bye laws; comprehensive integration of e-shram portal with other portals will help India step change to a higher growth trajectory. However, it will be pertinent that the Centre and States work in tandem to see through this broader and deeper reform agenda.
In addition, the intent displayed towards further simplification of the tax regime is laudable. Simplification of the tax regime for charity, TDS structure, abolishment of Angel tax for all classes of investors are notable measures. We also look forward to the review of customs duty changes for giving boost to manufacturing and further rationalisation over next six months. Moreover, the comprehensive review of the Income-tax Act, 1961 will help reduce disputes and litigation and this will enable the industry to do what it does best which is focussing on business growth. We are happy that the government is continuing to stick to the mantra of minimum government and maximum governance in true letter and spirit.
The industry is also encouraged to note that Nari Shakti remains government’s clarion call. The budget carries a whopping allocation of more than Rs 3 lakh crore for women and girl oriented schemes. Strengthening of the care economy, creating greater avenues for skills training, and opportunities for accessing newer markets are key imperative for promoting women’s participation in the economy. And the budget has touched on all these aspects. Announcement for setting up infrastructure such as working women hostels, creches etc. near industrial clusters as well as launching women specific skilling programs are enabling measures. The Economic Survey 2023-24 revealed India’s female labour force participation rate has improved to 37 percent, and we should strive at taking this further up to 50 percent during the period of Karvatya Kaal.
Finally, the government needs to be congratulated for the deftness displayed on fiscal side. After reining the fiscal deficit target for 2023-24 (5.6 percent vis-à-vis estimated 5.8 percent), the downward revision in 2024-25 projection to 4.9 percent from 5.1 percent announced in the Interim Budget earlier this year reflects government’s astuteness in fiscal management.
Also, the thrust on capex has been accompanied by a consumption push, which is much appreciated and timely. The tax relief to individuals under new tax regime is welcome and is poised to stimulate consumer spending over the near term. However, even though the allocation of Rs 11.1 lakh crore announced in Budget is on track – we feel a higher nudge to capital expenditure could have further aided the productive capacity of the economy.
India’s economy is well poised. Despite multiple headwinds, the growth trajectory has been healthy. The continuation of a reform driven agenda in the Budget is a roadmap for prosperity that will guide India’s transformation in the years to come.
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