Introduction

The Union Budget for the fiscal year 2024-25 was unveiled by the Finance Minister on February 1, 2024. As always, this annual financial statement provides insights into the government’s economic policies and priorities for the upcoming year. The 2024 Budget, delivered against the backdrop of a recovering economy and evolving global challenges, offers a blend of continuity and change. Here’s a comprehensive look at the key highlights and implications of the Budget 2024.

Key Highlights

1. Economic Growth and Fiscal Responsibility

The Budget projects India’s GDP growth at 6.5% for 2024-25, reflecting a cautious optimism about the economic recovery. The government aims to balance growth with fiscal responsibility, targeting a fiscal deficit of 4.5% of GDP, down from 4.7% in the previous year. This reduction is part of a long-term strategy to stabilize public finances while supporting economic growth.

2. Infrastructure Investment

Infrastructure development remains a cornerstone of the Budget. The government has allocated ₹7.5 lakh crore towards infrastructure projects, with a focus on roads, railways, and urban development. A significant portion of this allocation is earmarked for the PM Gati Shakti National Master Plan, aimed at boosting logistics and connectivity across the country.

3. Tax Reforms and Incentives

The Budget introduces several tax reforms to simplify the tax structure and enhance compliance. Key measures include:

• Personal Income Tax: The government has revised the personal income tax slabs, providing relief to middle-class taxpayers. The new tax slabs are expected to reduce the tax burden on individuals and stimulate consumer spending.
• Corporate Tax: To encourage investment, the Budget proposes a reduction in the corporate tax rate for small and medium-sized enterprises (SMEs) to 22%, down from 25%.
• Goods and Services Tax (GST): The GST framework will undergo further simplification, including the introduction of a new GST return filing system aimed at reducing compliance costs for businesses.

4. Agriculture and Rural Development

Recognizing the importance of agriculture in India’s economy, the Budget includes several measures to support farmers and rural communities. This includes:

• Increased MSP: The Minimum Support Price (MSP) for key crops has been revised upwards to ensure better income for farmers.
• Rural Infrastructure: An allocation of ₹2 lakh crore has been made for rural infrastructure projects, focusing on irrigation, rural roads, and storage facilities.

5. Healthcare and Education

The health and education sectors have received significant attention in the Budget. Key initiatives include:

• Healthcare: The government has allocated ₹1.2 lakh crore for healthcare, focusing on expanding healthcare infrastructure and improving access to quality medical services in rural areas.
• Education: An increase in funding for educational institutions, including new schools and higher education facilities, aims to enhance the quality of education and support skill development programs.

6. Environment and Sustainability

The Budget emphasizes the government’s commitment to environmental sustainability. Key measures include:

• Green Bonds: The introduction of sovereign green bonds to finance projects aimed at reducing carbon emissions and promoting renewable energy.
• Climate Action: An additional ₹50,000 crore has been allocated for climate resilience and adaptation projects.

Implications and Analysis

1. Impact on Economic Growth

The focus on infrastructure investment and tax reforms is likely to stimulate economic activity and attract private investment. The projected GDP growth of 6.5% is achievable if the planned reforms are effectively implemented and global economic conditions remain favorable.

2. Relief for Taxpayers

The revised tax slabs and corporate tax incentives are expected to provide relief to individuals and businesses. This could boost consumer spending and investment, contributing to economic growth.

3. Support for Agriculture

Increased MSP and rural infrastructure investment should support the agricultural sector and enhance rural livelihoods. However, the success of these measures will depend on their effective implementation and monitoring.

4. Advancements in Healthcare and Education

The increased funding for healthcare and education is a positive step towards improving social infrastructure. These investments are crucial for enhancing human capital and supporting long-term economic development.

5. Environmental Considerations

The focus on green bonds and climate action reflects a growing recognition of environmental sustainability. These measures align with global climate goals and could position India as a leader in sustainable development.

Conclusion

The Union Budget 2024 presents a balanced approach to addressing India’s economic challenges while promoting growth and development. By focusing on infrastructure, tax reforms, agriculture, healthcare, education, and environmental sustainability, the Budget aims to lay a solid foundation for India’s future prosperity. As always, the success of these initiatives will hinge on their execution and the ability to navigate both domestic and global economic dynamics.