India’s Union Budget 2024-25 Investor Perspective: Key Highlights

India’s Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, 2024, is designed to propel the country towards sustained economic growth. This budget, the first under the third consecutive Narendra Modi government, places a strong emphasis on key areas such as education, employment, skilling, industry 4.0, and support for the middle class. This article delves into the various aspects of the budget, offering a comprehensive analysis from an investor’s perspective.

Key Themes of the Union Budget 2024-25

1. Education and Skilling

The budget has allocated INR 1.48 trillion for education and skilling, marking a significant increase over previous years. This funding aims to enhance educational infrastructure, improve the quality of education, and align skilling programs with industry needs. Key initiatives include:

• Upgrading 1,000 Industrial Training Institutes (ITIs) with industry-aligned courses.
• Launching a Model Skill Loan Scheme, providing loans up to INR 750,000 with a government-backed guarantee.
• Increasing support for higher education loans to INR 1 million for students not covered by other benefits.

2. Employment Generation

The Union Budget 2024-25 has introduced several measures to boost employment:

• Three new Employment Linked Incentives (ELIs) schemes to support first-time employees and manufacturing job creation.
• Establishing working women hostels and organizing women-specific skilling programs.
• A new skilling scheme in collaboration with state governments and industry to train 2 million youth over five years.

3. Support for MSMEs

Micro, Small, and Medium Enterprises (MSMEs) receive comprehensive support in the form of financing, regulatory reforms, and technological assistance:

• A new credit guarantee scheme offering term loans without collateral for MSMEs.
• Enhanced Mudra loan limits and expansion of the TReDS platform to include medium enterprises.
• Financial assistance for setting up multi-product food irradiation units and food quality testing labs.

4. Infrastructure Development

Significant investments in infrastructure are a cornerstone of the budget:

• Total capital expenditure is projected at INR 11.1 trillion, with effective capital expenditure estimated at INR 15.01 trillion.
• Launch of Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) to provide all-weather connectivity to 25,000 rural habitations.
• Development of investment-ready industrial parks in or near 100 cities.

5. Urban Development

The budget outlines a comprehensive approach to urban development:

• PM Awas Yojana Urban 2.0 aims to address housing needs with an investment of INR 1 trillion.
• Transit Oriented Development plans for 14 large cities.
• Collaboration with states to develop ‘Cities as Growth Hubs’ focusing on economic and transit planning.

6. Energy Security

To ensure energy security, the budget includes:

• A policy document on energy transition pathways balancing employment, growth, and environmental sustainability.
• Promotion of pumped storage projects for electricity storage.
• Research and development of small and modular nuclear reactors.

7. Taxation Reforms

The Union Budget 2024-25 introduces several taxation reforms:

• Reduced income tax rates for certain income brackets to boost consumption.
• Changes to the new tax regime resulting in net gains for taxpayers.
• Adjustments to the short-term and long-term capital gains tax rates.

8. Healthcare Initiatives

Healthcare receives a significant boost with a budget allocation of INR 9.095 billion:

• Customs duties exemptions on three cancer treatment drugs.
• Increased budgets for the National Health Mission and the Pradhan Mantri Jan Arogya Yojna (PM-JAY).
• Continued support for the National Digital Health Mission.

Fiscal Deficit and Expenditure

The fiscal deficit target for 2024-25 has been revised to 4.9 percent of GDP, with plans to reduce it to 4.5 percent by FY 2025-26. The total expenditure for 2024-25 is estimated at INR 48.2 trillion.

Sector-Specific Highlights

Agriculture and Allied Sectors

The budget allocates INR 1.52 trillion for agriculture and allied sectors, with initiatives including:

• Release of new high-yielding and climate-resilient crop varieties.
• Support for natural farming and bio-input resource centers.
• Strengthened production, storage, and marketing of pulses and oilseeds.

Manufacturing and Services

Key measures to promote manufacturing and services include:

• Development of industrial parks and rental housing for industrial workers.
• Reforms in the shipping industry and offshore mining of minerals.
• Enhanced digital public infrastructure for various sectors.

Innovation and R&D

To foster innovation and research, the budget proposes:

• Establishment of the Anusandhan National Research Fund.
• A financing pool for private sector-driven research and innovation.
• Expansion of the space economy with a venture capital fund.

Investor Perspective

From an investor’s perspective, the Union Budget 2024-25 offers several opportunities:

• Enhanced infrastructure spending and urban development projects provide avenues for investment in real estate and construction.
• Support for MSMEs and the manufacturing sector can stimulate growth in related industries.
• Reforms in taxation and regulatory frameworks improve the business environment, making India an attractive destination for foreign investment.

Conclusion

India’s Union Budget 2024-25 is a forward-looking document aimed at fostering economic growth, enhancing infrastructure, and supporting key sectors. With significant allocations for education, employment, MSMEs, and healthcare, the budget lays the groundwork for a prosperous future. Investors can look forward to numerous opportunities arising from the government’s comprehensive and ambitious plans.

Data Table: Key Allocations in Union Budget 2024-25

India’s Union Budget 2024-25 is poised to drive growth and development across multiple sectors, offering numerous opportunities for investors to participate in the country’s economic journey.