The Union Budget 2024-25, presented with a meticulous balance of ambition and pragmatism, highlights the government’s commitment to strengthening the economy while addressing key areas such as employment, skilling, MSMEs, and the middle class. With a total expenditure set at ₹48.21 lakh crore against receipts (excluding borrowings) of ₹32.07 lakh crore, the fiscal deficit is projected at 4.9% of GDP, with a target to reduce it below 4.5% next year.
Employment and Skilling Initiatives
A significant highlight of the budget is the Prime Minister’s Package of five schemes aimed at creating employment and enhancing skills for 4.1 crore youth over five years. These schemes are:
1. Scheme A – First Timers: This scheme provides up to ₹15,000 in three installments to first-time employees registered with the Employees’ Provident Fund Organisation (EPFO).
2. Scheme B – Job Creation in Manufacturing: Incentives will be given directly to both employees and employers for their EPFO contributions during the first four years of employment.
3. Scheme C – Support to Employers: The government will reimburse up to ₹3,000 per month for two years towards the EPFO contribution for each additional employee.
4. New Centrally Sponsored Scheme for Skilling: Aims to skill 20 lakh youth over five years, upgrading 1,000 Industrial Training Institutes in hub-and-spoke arrangements.
5. Internship Scheme: Offers internship opportunities to 1 crore youth in 500 top companies over five years.
Nine Budget Priorities
The budget outlines nine priorities to drive the nation towards ‘Viksit Bharat’:
1. Productivity and Resilience in Agriculture: With an allocation of ₹1.52 lakh crore, the government aims to introduce 109 high-yielding, climate-resilient crop varieties, initiate 1 crore farmers into natural farming, and establish 10,000 bio-input resource centers. Digital Public Infrastructure (DPI) for Agriculture is also on the agenda.
2. Employment and Skilling: Beyond the Prime Minister’s Package, the budget includes measures to boost women’s participation in the workforce through hostels, crèches, women-specific skilling programs, and market access for women-led SHG enterprises.
3. Inclusive Human Resource Development and Social Justice: Initiatives include industrial development under the Purvodaya scheme, substantial financial support under the Andhra Pradesh Reorganization Act, and schemes benefitting women and tribal communities.
4. Manufacturing and Services: The budget supports MSMEs through a credit guarantee scheme, mechanisms for credit support during stress periods, enhanced Mudra loan limits, and financial support for food irradiation units.
5. Urban Development: Investment in urban housing, support for street markets, and the formulation of Transit Oriented Development plans for 14 large cities are key highlights.
6. Energy Security: Policies for energy transition, promoting pumped storage projects, and R&D partnerships for small modular reactors and advanced thermal power plants are outlined.
7. Infrastructure: Capital expenditure of ₹11,11,111 crore and support for state infrastructure investment are planned, along with major irrigation and flood mitigation projects.
8. Innovation, Research, and Development: The Anusandhan National Research Fund and a ₹1 lakh crore financing pool for private sector-driven R&D are proposed, along with a venture capital fund for the space economy.
9. Next Generation Reforms: Focus on digitizing land records, integrating labor market databases, and simplifying tax regimes.
Indirect and Direct Tax Reforms
In indirect taxes, the budget proposes rationalizing GST and sector-specific customs duty changes to promote various industries. Significant exemptions and reductions are introduced for critical minerals, solar energy components, marine products, and certain medical and electronic equipment.
In direct taxes, the emphasis is on simplifying the tax structure, enhancing taxpayer services, and encouraging investments. Changes include merging tax exemption regimes for charities, simplifying TDS rates, rationalizing capital gains taxes, and providing digital services for customs and income tax. The ‘Vivad Se Vishwas Scheme, 2024’ aims to resolve pending income tax disputes, while monetary limits for filing appeals in tax tribunals and courts are increased.
Social Security and Personal Income Tax Changes
The budget also focuses on social security by increasing the employer’s deduction towards NPS and introducing ‘NPS Vatsalya’ for minors. Personal income tax changes under the new regime include increased standard deductions for salaried employees and enhanced deductions on family pensions. The Union Budget 2024-25, introduced significant tax relief measures for salaried individuals and pensioners. Key highlights include:
1. Increase in Standard Deduction:
The standard deduction for salaried employees will rise from ₹50,000 to ₹75,000. This change is aimed at reducing the taxable income of salaried individuals, thereby lowering their tax liability.
2. Enhanced Deduction on Family Pension:
For pensioners, the deduction on family pension is proposed to increase from ₹15,000 to ₹25,000. This adjustment is designed to provide additional financial relief to pensioners, making their post-retirement income more tax-efficient.
Under the new tax regime, allowing salaried employees to save up to ₹17,500 in taxes. The new tax slabs are
Up to ₹3 lakh: Nil tax
₹3 lakh to ₹7 lakh: 5% tax rate
₹7 lakh to ₹10 lakh: 10% tax rate
₹10 lakh to ₹12 lakh: 15% tax rate
₹12 lakh to ₹15 lakh: 20% tax rate
Above ₹15 lakh: 30% tax rate
These measures are expected to benefit approximately four crore salaried individuals and pensioners, offering them increased disposable income and greater financial flexibility under the new tax regime.
The Union Budget 2024-25 is a forward-looking financial plan designed to foster inclusive growth, drive employment and skilling, bolster MSMEs, and support the middle class. With a clear focus on long-term development and fiscal prudence, it sets the stage for a robust and resilient economy.
