Modi 3.0's First Budget: Nirmala Sitharaman Unveils Vision for 'Amrit Kaal' in Union Budget 2024-25

Finance Minister Nirmala Sitharaman unveiled the Union Budget 2024-25 in parliament today, marking the first budget of Prime Minister Narendra Modi's third term. This comprehensive fiscal plan lays out a robust strategy for economic growth and social development, focusing on nine key priorities to generate opportunities for all citizens.

Economic Outlook and Fiscal Management

Despite global economic uncertainties, India's economy continues to demonstrate remarkable resilience. Inflation remains low and stable, providing a solid foundation for growth. The government has set an ambitious fiscal deficit target of 4.9% of GDP for FY25, down from 5.1% in the Interim Budget. This commitment to fiscal prudence is further underscored by the goal to reduce the deficit below 4.5% in the coming year.

The budget projects FY25 expenditure at ?48.21 lakh crore, with receipts estimated at ?32.07 lakh crore. These figures reflect a balanced approach to stimulating growth while maintaining fiscal discipline.

Tax Reforms: Simplification and Incentivization

The new budget introduces significant tax reforms aimed at simplifying the tax structure and incentivizing economic activity:

1. Income Tax (New Regime): The government has introduced a revised tax slab structure under the new regime:

• ?0-3 lakh: Nil
• ?3-7 lakh: 5%
• ?7-10 lakh: 10%
• ?10-12 lakh: 15%
• ?15 lakh and above: 30%

This simplified structure aims to provide relief to taxpayers and encourage the adoption of the new tax regime.

2. Corporate Tax: In a move to attract foreign investment, the tax rate on foreign companies has been reduced from 40% to 35%.

3. Capital Gains Tax: The budget introduces several changes to capital gains taxation:

• Short-term gains tax on specified financial assets has been increased to 20% from 15%
• Long-term gains tax on all assets has been raised to 12.5%
• The exemption limit for capital gains on certain listed financial assets has been increased from ?1 lakh to ?1.25 lakh per year

4.?TDS and TCS: New provisions have been introduced to widen the tax net and improve compliance:

• 10% TDS on payments by firms to partners exceeding ?20,000 annually
• 1% TCS on notified luxury goods exceeding ?10 lakh
• TDS on interest exceeding ?10,000 on Floating Rate Savings Bonds

5.??Custom Duties: The government has announced several changes to custom duties to boost domestic manufacturing and processing:

• Reduced to 6% on gold and silver, 6.4% on platinum
• Exemptions for lithium, copper, cobalt, and manufacturing of solar cells and panels

MSME Support and Skill Development

The budget places a strong emphasis on supporting MSMEs and enhancing skill development:

• The Mudra loan limit has been increased from ?10 lakh to ?20 lakh.
• A new mechanism will facilitate bank credit during stress periods.
• E-Commerce Export Hubs will be set up in PPP mode.
• 1,000 ITIs will be upgraded over 5 years.
• An internship program for 1 crore youth with top companies has been announced.
• Three new employment-linked incentive schemes have been introduced.

Agriculture and Infrastructure

The agricultural sector receives significant attention with an allocation of ?1.52 lakh crore for agriculture and allied sectors. Key initiatives include:

• Establishment of 10,000 bio-research centers
• Promotion of natural farming for 1 crore farmers
• Strengthening production, storage, and marketing for self-reliance in pulses and oilseeds
• Higher Minimum Support Prices (MSP) for major crops
• PM Garib Kalyan Anna Yojana extended for 5 years, benefiting over 80 crore people

Infrastructure development remains a priority, with capex maintained at ?11.11 lakh crore (3.4% of GDP). The government plans to develop industrial parks in or near 100 cities and set up a Critical Mineral Mission.

The Union Budget 2024-25 presents a comprehensive roadmap for India's economic growth and social development. By focusing on key sectors such as agriculture, infrastructure, and skill development, while maintaining fiscal prudence, the government aims to create a robust foundation for sustainable and inclusive growth.