India’s Economic Outlook and Indian Union Budget 2024-2025 Highlights

India’s Economic Outlook and Indian Union Budget 2024-2025 Highlights

India continues to demonstrate robust economic growth amid global policy uncertainties, according to Finance Minister Nirmala Sitharaman, who presented the Union Budget 2024-2025 in Parliament. Key points include low and stable inflation moving towards the 4% target, with core inflation (excluding food and fuel) at 3.1%. The government is taking steps to ensure an adequate supply of perishable goods.

Interim Budget Focus

The interim budget emphasized four major demographic groups: the poor (Garib), women (Mahilayen), youth (Yuva), and farmers (Annadata). Indian Union Budget 2024

Budget Theme

The budget prioritizes employment, skilling, MSMEs, and the middle class, with a central outlay of ₹2 lakh crore over five years to create opportunities for 4.1 crore youth. This year, ₹1.48 lakh crore has been allocated for education, employment, and skilling. 

Budget Priorities Indian Union Budget 2024

1. Productivity and Resilience in Agriculture:

• • Comprehensive review of agriculture research to boost productivity.
  • Release of 109 high-yielding, climate-resilient crop varieties.
  • Promotion of natural farming for 1 crore farmers over two years.
  • Establishment of 10,000 bio-input resource centers.
  • Strengthening production, storage, and marketing of pulses and oilseeds.
  • Implementation of Digital Public Infrastructure in agriculture within three years.
  • Allocation: ₹1.52 lakh crore for agriculture and allied sectors.

2. Employment & Skilling: Indian Union Budget 2024

• • Three new Employment Linked Incentive schemes based on EPFO enrollment.
  • Initiatives to boost female workforce participation, including hostels and crèches.
  • New centrally sponsored skilling scheme in collaboration with states and industry, targeting 20 lakh youth over five years.
  • Revised Model Skill Loan Scheme with loans up to ₹7.5 lakh, expected to assist 25,000 students every year.
  • Financial support for higher education loans up to ₹10 lakh for 1 lakh students annually.

3. Inclusive Human Resource Development and Social Justice: Indian Union Budget 2024

• • Implementation of schemes for craftsmen, artisans, self-help groups, SC/ST and women entrepreneurs, and street vendors.
  • Purvodaya plan for eastern region development.
  • Pradhan Mantri Janjatiya Unnat Gram Abhiyan for tribal socio-economic improvement.
  • Expansion of India Post Payment Bank branches in the North East.
  • Allocation: ₹2.66 lakh crore for rural development and infrastructure.

4. Manufacturing & Services:

• • Focus on MSMEs and labor-intensive manufacturing.
  • Self-financing guarantee fund for MSME credit up to ₹100 crore.
  • Enhanced Mudra loan limit to ₹20 lakh.
  • Financial support for MSME food irradiation units and quality testing labs.
  • E-Commerce Export Hubs in PPP mode.
  • Internship scheme in top companies for 1 crore youth over five years.

5. Urban Development:

• • PM Awas Yojana Urban 2.0 for housing needs of 1 crore urban poor and middle-class families.
  • Water supply, sewage treatment, and solid waste management projects for 100 large cities.
  • Support for 100 weekly street food hubs annually under the PM SVANidhi Scheme.

6. Energy Security: Indian Union Budget 2024

• • PM Surya Ghar Muft Bijli Yojana for free electricity up to 300 units monthly.
  • Emphasis on nuclear energy.

7. Infrastructure:

• • Continued fiscal support for infrastructure with ₹11,11,111 crore allocated for capital expenditure.
  • Launch of PMGSY Phase IV for rural connectivity.
  • Financial support for irrigation and flood mitigation projects in Bihar, Assam, Himachal Pradesh, Uttarakhand, and Sikkim.

8. Innovation, Research & Development:

• • Operationalization of Anusandhan National Research Fund.
  • Venture capital fund of ₹1,000 crore for the space economy.

9. Next Generation Reforms:

• • Development of an Economic Policy Framework for future reforms.
  • Integration of e-shram portal for labor services.
  • Simplification of FDI and overseas investment regulations.
  • Introduction of NPS Vatsalya for minor contributions, convertible to regular NPS accounts.
  • Progress on New Pension Scheme (NPS) review.

The Union Budget 2024-25 outlines comprehensive measures to bolster India’s economic resilience, with a strong focus on inclusive growth, innovation, and infrastructure development.

Budget Estimates for 2024-2025

Finance Minister Nirmala Sitharaman announced that the total receipts (excluding borrowings) and total expenditure for 2024-25 are estimated at ₹32.07 lakh crore and ₹48.21 lakh crore, respectively. Net tax receipts are projected at ₹25.83 lakh crore, with a fiscal deficit of 4.9% of GDP. The estimated gross and net market borrowings through dated securities are ₹14.01 lakh crore and ₹11.63 lakh crore, respectively. The government aims to reduce the deficit below 4.5% next year, continuing the fiscal consolidation path initiated in 2021.

Tax Reforms and Reliefs

The Union Budget 2024-25 includes significant tax reforms and relief measures:

1. Direct and Indirect Taxes:

• • A comprehensive review of direct and indirect taxes is planned within the next six months to simplify, reduce tax incidence and compliance burdens, and broaden tax nets.
  • GST structure will be rationalized, and the Customs Duty rate structure will be reviewed to enhance the tax base and support domestic manufacturing.
  • A review of the Income Tax Act aims to reduce disputes and litigation and make the act more concise and user-friendly.

2. Personal and Corporate Income Tax:

• • Standard deduction for salaried employees opting for the new tax regime increased from ₹50,000 to ₹75,000.
  • Deduction on family pension for pensioners increased from ₹15,000 to ₹25,000.
  • Revised tax rates for salaried employees providing benefits up to ₹17,500.

New Income Tax Slabs:

• • Abolition of angel tax for all investor classes.
  • Simplified tax regime for foreign shipping companies operating domestic cruises.
  • Safe harbor rates for foreign mining companies selling raw diamonds in India.
  • Corporate tax rate for foreign companies was reduced from 40% to 35%.

3. Capital Gains Tax: Indian Union Budget 2024

• • Short-term gains are taxed at 20% on certain financial assets. Indian Union Budget 2024
  • Long-term gains on all financial and non-financial assets are taxed at 12.5%.
  • Exemption limit for capital gains increased to ₹1.25 lakh annually.
  • Listed financial assets held for more than a year and unlisted assets held for more than two years are classified as long-term assets.

4. Charities and TDS: Indian Union Budget 2024

• • Merging of two tax exemption regimes for charities into one. Indian Union Budget 2024
  • Reduction of TDS rates on various payments, including from 1% to 0.1% on e-commerce operators.
  • Decriminalization of TDS payment delays up to the due date of filing the TDS statement.

Customs Duty Revisions: Indian Union Budget 2024

• • Exemptions for three cancer treatment medicines (Trastuzumab Deruxtecan, Osimertinib, and Durvalumab).
  • Reduction of Basic Customs Duty (BCD) on X-ray machine tubes, flat panel detectors, mobile phones, PCBAs, and mobile chargers to 15%.
  • Full exemption of customs duties on 25 rare earth minerals like lithium and on capital goods for manufacturing solar panels.
  • Reduction of BCD on seafood-related products to 5%.
  • Reduction of BCD on Methylene Diphenyl Diisocyanate (MDI) used in spandex yarn to 5%.
  • Custom duties on gold and silver were reduced to 6% and on platinum to 6.4%. Indian Union Budget 2024
  • Removal of BCD on ferro nickel and blister copper, and increase on ammonium nitrate from 7.5% to 10%.
  • Increase in BCD on PVC flex banners from 10% to 25% due to environmental concerns.
  • Increase in BCD on PCBA for specific telecom equipment from 10% to 15%.

Dispute Resolution and Litigation Reduction:

• • Introduction of the Vivad se Vishwas Scheme, 2024 for resolving income tax disputes pending in appeal.
  • Increased monetary limits for filing appeals related to direct taxes, excise, and service tax in High Courts, Supreme Courts, and tribunals to ₹60 lakh, ₹2 crore, and ₹5 crore, respectively.
  • Expansion of safe harbor rules and streamlining of transfer pricing assessment procedures to reduce litigation and provide certainty in international taxation. Indian Union Budget 2024
  • The Union Budget 2024-25 aims to foster economic growth by implementing comprehensive tax reforms, promoting investment, and simplifying compliance, while maintaining fiscal prudence.