Shiva Sharma (Chandigarh): On 23rd July 2024, amidst anticipation and national focus, Union Finance Minister Nirmala Sitharaman unveiled her seventh consecutive Union Budget. This pivotal document, the Union Budget 2024-25, charts India's course for development under Modi 3.0. More than a financial statement, it's a blueprint defining fiscal policies, investments, and socio-economic priorities for the next five years. With eyes on growth, welfare, and sustainability, this Budget resonates as a compass guiding India towards prosperity and equitable progress.
Navigating Global Economic Uncertainties: Risks, Challenges, and India's Resilient Growth
The global economy is exceeding expectations in performance, but it confronts substantial challenges due to uncertain policies. There are several factors contributing to these challenges:
Elevated Asset Prices: High prices of stocks, real estate, and other assets may trigger financial instability, potentially dampening economic growth.
Political Uncertainties: Unforeseeable political developments worldwide are fostering an atmosphere of instability, which could undermine economic confidence and investment.
Shipping Disruptions: Issues within the shipping industry, such as delays and supply chain disruptions, are adversely affecting global trade, potentially slowing down economic activity.
These factors collectively pose significant risks. They could hinder economic growth (downside risks) and drive up inflation (upside risks) as the costs of goods and services rise.
In this context, India distinguishes itself with sustained economic growth that is anticipated to continue into the foreseeable future. India's inflation rate remains low and stable, steadily approaching the target of 4 percent. Specifically, core inflation, which excludes food and fuel prices, is currently at 3.1 percent. Efforts are underway to ensure that perishable goods are adequately supplied to the market.
Interim Budget: Updates and Policy Extensions
As outlined in the interim budget, the Government has identified four key priority groups: the Poor (Garib), Women (Mahilayen), Youth (Yuva), and Farmers (Annadata). For Annadata, the Government recently increased Minimum Support Prices (MSPs) for all major crops, fulfilling its commitment to provide a minimum 50% profit margin over production costs.
The Pradhan Mantri Garib Kalyan Anna Yojana, which supports food security through subsidized grains, has also been extended for another five years. This extension is expected to benefit over 80 crore people across the country. Furthermore, administrative procedures for approving and implementing various schemes from the interim budget are currently in progress, with necessary allocations already secured.
Union Budget 2024 Theme: Government's Strategic Focus on Employment, Skill Development, and MSMEs
Under the current budget plan and looking ahead, the Government is focusing heavily on several key areas. These include employment generation, skill development, support for MSMEs (Micro, Small, and Medium Enterprises), and the welfare of the middle class.
Finance Minister Nirmala Sitharaman highlighted the introduction of the Prime Minister’s package consisting of 5 schemes and initiatives aimed at promoting employment opportunities and skill development. Over the next 5 years, these initiatives are expected to benefit 4.1 crore youth, supported by a substantial budget allocation of ₹2 lakh crore from the central government.
Specifically for this year, the Finance Minister has allocated ₹1.48 lakh crore towards enhancing education, employment opportunities, and skill development. This allocation underscores the government's commitment to fostering growth in these critical sectors, aiming to empower youth and bolster economic resilience in the years ahead.
Building 'Viksit Bharat': Government's Strategic Priorities for a Developed India
In the interim budget, the Government committed to outlining a comprehensive plan for achieving 'Viksit Bharat' (Developed India). This budget aligns with the interim budget's strategy and focuses on nine key priorities aimed at creating abundant opportunities for all citizens:
- Productivity and Resilience in Agriculture
- Employment & Skilling
- Inclusive Human Resource Development and Social Justice
- Manufacturing & Services
- Urban Development
- Energy Security
- Infrastructure
- Innovation, Research & Development and
- Next Generation Reforms
Future budgets will expand upon these priorities, introducing additional actions and areas of focus. A more detailed economic policy framework will be discussed later in this speech to provide a structured formulation for these goals.
Transformative Priorities for 2024-25: Agriculture, Employment, Infrastructure, and Innovation
Priority 1: Productivity and Resilience in Agriculture
According to the Union Budget 2024-25, exciting changes are coming to agriculture as the government embarks on a transformative journey to boost productivity and resilience. A sweeping review of agricultural research infrastructure will drive innovation, with funding bolstered by private sector involvement and expert oversight. Farmers can look forward to 109 new high-yielding and climate-resilient crop varieties.
Meanwhile, 10 million farmers will be introduced to natural farming practices over the next two years, supported by local bio-input centers. The push for self-sufficiency in pulses and oilseeds will enhance production and marketing strategies. Vegetable production will be streamlined with new clusters and strengthened supply chains. Digital Public Infrastructure will soon integrate data for millions of farmers, while shrimp production and export initiatives get a boost.
Furthermore, a new National Cooperation Policy will promote rural economic growth and job creation. With a significant ₹1.52 lakh crore investment, this ambitious plan promises to reshape the future of Indian agriculture.
Priority 2: Employment & Skilling
The Prime Minister's Employment Linked Incentive package is set to revolutionize job creation and support for both employees and employers. The package features three dynamic schemes: Scheme A, offering a one-month salary of up to ₹15,000 to first-time job entrants; Scheme B, which provides incentives to boost manufacturing sector jobs and support both new employees and their employers; and Scheme C, reimbursing employers up to ₹3,000 per month for each additional employee hired.
Additionally, the government is committed to increasing women's workforce participation through improved facilities and targeted skilling programs and will enhance skilling opportunities with a major upgrade to Industrial Training Institutes. For education, revised loan schemes will assist thousands of students with higher education and skill development. This comprehensive approach aims to invigorate the job market and foster sustainable growth.
Priority 3: Inclusive Human Resource Development and Social Justice
The Government is dedicated to holistic development, emphasizing farmers, youth, women, and the poor, through a saturation approach covering all eligible people with education and health programs to enhance their capabilities. Economic schemes like PM Vishwakarma and Stand-Up India will support diverse entrepreneurs, while the Purvodaya plan focuses on the eastern states, aiming for comprehensive development, including human resources and infrastructure. Major projects include the Amritsar Kolkata Industrial Corridor and road connectivity projects costing ₹26,000 crore, with a new 2400 MW power plant at Pirpainti for ₹21,400 crore.
The Andhra Pradesh Reorganization Act's commitments will be fulfilled with ₹15,000 crore this year and support for the Polavaram Irrigation Project. The PM Awas Yojana will add three crore houses, and over ₹3 lakh crore is allocated for women-led development. The Pradhan Mantri Janjatiya Unnat Gram Abhiyan will benefit 63,000 tribal villages, and the North East will see over 100 new bank branches, with ₹2.66 lakh crore for rural development.
Priority 4: Manufacturing & Services
This budget emphasizes the promotion of MSMEs and labor-intensive manufacturing. Key measures include a Credit Guarantee Scheme offering up to ₹100 crore for machinery and equipment, and a new credit assessment model based on digital footprints. Finance Minister Nirmala Sitharaman introduced credit support during stress periods, increased Mudra loan limits to ₹20 lakh, and reduced the TReDS onboarding threshold to ₹250 crores. SIDBI will open 24 new branches to cover 168 clusters, and financial support will be provided for 50 food irradiation units and 100 food safety labs.
E-Commerce Export Hubs, internship opportunities for 1 crore youth, and the development of 100 industrial parks are planned. Rental housing, shipping reforms, a Critical Mineral Mission, and offshore mining auctions will enhance the industrial sector. Digital Public Infrastructure applications, an Integrated Technology Platform for IBC, and streamlined processes for LLP closures and debt recovery will further support MSMEs and overall economic growth.
Priority 5: Urban Development
The government is partnering with states to develop 'Cities as Growth Hubs' through economic and transit planning, focusing on orderly peri-urban development. For creative redevelopment, we will establish policies and market mechanisms to transform existing cities. Transit-Oriented Development plans will target 14 large cities with populations over 30 lakh. Under PM Awas Yojana Urban 2.0, the Government aims to meet the housing needs of 1 crore urban poor and middle-class families, investing ₹10 lakh crore, including ₹2.2 lakh crore in central assistance over five years, with affordable loan subsidies.
Water supply, sewage treatment, and solid waste management projects will be promoted in 100 large cities, utilizing treated water for irrigation. The Government also plans to support 100 weekly 'haats' annually for the next five years, following the success of the PM SVANidhi Scheme. Additionally, the Government will encourage states to reduce high stamp duties, particularly for properties purchased by women.
Priority 6: Energy Security
In the interim budget, Finance Minister Nirmala Sitharaman outlined the Government's strategy for resource-efficient economic growth and energy security. The PM Surya Ghar Muft Bijli Yojana will install rooftop solar plants for 1 crore households, offering free electricity up to 300 units monthly, with 1.28 crore registrations and 14 lakh applications already. A policy for promoting pumped storage projects will enhance renewable energy integration.
The Government will partner with the private sector to develop Bharat Small Reactors and Bharat Small Modular Reactors, with R&D funding announced in the interim budget. An 800 MW Advanced Ultra Super Critical thermal power plant, a joint venture between NTPC and BHEL, will be set up with government fiscal support. Regulations will transition 'hard to abate' industries to emission targets, and an energy audit will support 60 traditional micro and small industry clusters, with plans to expand to 100 clusters.
Priority 7: Infrastructure
The Central Government has allocated ₹11,11,111 crore for capital expenditure this year, representing 3.4% of GDP, with a commitment to maintain strong fiscal support for infrastructure over the next five years. States will be encouraged to match this scale of investment, supported by ₹1.5 lakh crore in long-term interest-free loans. Private investment in infrastructure will be promoted through viability gap funding. Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will provide all-weather connectivity to 25,000 rural habitations.
The government will allocate ₹11,500 crore for flood control and irrigation projects, including the Kosi-Mechi link. Assistance will be provided to Assam, Himachal Pradesh, Uttarakhand, and Sikkim for flood management and reconstruction. Tourism initiatives include developing the Vishnupad and Mahabodhi Temple Corridors, Rajgir, and Nalanda, alongside support for Odisha’s tourism infrastructure.
Priority 8: Innovation, Research & Development
The Government will operationalize the Anusandhan National Research Fund for basic research and prototype development. Additionally, a financing pool of ₹1 lakh crore will be established to spur private sector-driven research and innovation at a commercial scale, as announced in the interim budget. To expand the space economy by five times in the next 10 years, a venture capital fund of ₹1,000 crore will be set up.
Priority 9: Next Generation Reforms
We will formulate an Economic Policy Framework to guide economic development and implement next-generation reforms for employment and growth. The government will allocate a significant portion of the 50-year interest-free loan to incentivize state-level land reforms within three years, including digitizing rural and urban land records. Labor reforms will integrate the e-shram portal with other portals, while the Shram Suvidha and Samadhan portals will be revamped.
A financial sector vision document will be prepared, and a taxonomy for climate finance will be developed. The Variable Capital Company structure will facilitate aircraft and ship leasing, while rules for Foreign Direct Investment will be simplified. The NPS Vatsalya plan will be introduced for minors, and technology adoption will be enhanced. The Jan Vishwas Bill 2.0 will improve the Ease of Doing Business, and sectoral databases will improve data governance.
The 2024-25 budget estimates total receipts at ₹32.07 lakh crore and expenditure at ₹48.21 lakh crore, with a fiscal deficit of 4.9% of GDP. Gross and net market borrowings are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore, respectively. The government aims to reduce the deficit below 4.5% next year and ensure a declining Central Government debt-to-GDP ratio from 2026-27 onwards.
Conclusion
In conclusion, the Union Budget 2024-25 unveiled by Finance Minister Nirmala Sitharaman represents a critical juncture in India’s developmental journey. Amid global uncertainties, the budget reflects a comprehensive strategy to address key national priorities, from agriculture and employment to urban development and energy security. With significant investments in infrastructure, innovation, and social welfare, the budget aims to foster sustainable growth and equitable progress. By aligning with Modi 3.0’s vision of a 'Viksit Bharat', it sets a clear path for India’s economic and social advancement over the next five years, emphasizing resilience, inclusivity, and future-ready reforms.
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