Jobs, Incentive, Internship, Tax Savings, Women Participation, Allies Headline in Modi 3.0 Budget

New Delhi: The first budget of the Modi 3.0 government, presented by Finance Minister Nirmala Sitharaman today, rolled out monetary support for several sectors, including a significant push on jobs, internships, salary incentives, increased tax savings, and measures to meet middle-class expectations, thereby sending a clear signal: Modi Cares. Sitharaman's budget also showed considerable support for NDA allies as she announced a Rs 60,000 crore stimulus for Bihar's road and infrastructure projects, including a power plant and Rs 15,000 crore for Andhra Pradesh for this financial year. The government's promise to provide internships to youths in the top 500 companies is another step that highlights its commitment to addressing employment issues in Modi 3.0.

In a nutshell, the budget 2024-25 offers something for nearly everyone. Finance Minister Nirmala Sitharaman stated the people have given a unique opportunity to the BJP-led NDA government to take the country on the path of strong development and all-round prosperity. 

Nine Priorities For Viksit Bharat

The Finance Minister said, that in pursuit of ‘Viksit Bharat’, the budget envisages sustained efforts on the 9 priorities for generating ample opportunities for all. “As highlighted in the interim budget, the government will prioritize four key groups: the poor (‘garib’), women (‘mahilayen’), youth (‘yuva’), and farmers (‘annadata’)”, said Sitharaman, as she presented her seventh consecutive budget.  

1. Productivity and resilience in Agriculture
2. Employment & Skilling
3. Inclusive Human Resource Development and Social Justice
4. Manufacturing & Services
5. Urban Development  
6. Energy Security
7. Infrastructure
8. Innovation, Research & Development and
9. Next Generation Reforms

Key Highlights of Budget 2024

Relief to Taxpayers

Budget 2024-25 increased the standard deduction of salaried employees from ₹ 50,000/- to ₹ 75,000/- for those opting for new tax regime. Similarly, deduction on family pension for pensioners enhanced from ₹ 15,000/- to ₹ 25,000/-. Assessments now, can be reopened beyond three years up to 5 years from end of year of assessment, only if, the escaped income is more than ₹ 50 Lakh. The new tax regime rate structure is also revised to give a salaried employee benefits up to ₹ 17,500/- in income tax.

To promote investment and foster employment, Budget has given boost to entrepreneurial spirit and start-up ecosystem, abolishing angel tax for all classes of investors. Further, a simpler tax regime for foreign shipping companies operating domestic cruises is proposed looking at the tremendous potential of cruise tourism. Foreign mining companies selling raw diamonds in the country can now benefit from safe harbor rates which will benefit the diamond industry. Further, corporate tax rate on foreign companies reduced from 40 to 35 per cent to attract foreign capital.

Budget further simplified the direct tax regime for charities, TDS rate structure and capital gains taxation. The two tax exemption regimes for charities will be merged into one. 5 per cent TDS on many payments to be merged into 2 per cent TDS and 20 per cent TDS on repurchase of units by mutual funds or UTI stands withdrawn. TDS rate on e-commerce operators reduced from 1 per cent to 0.1 per cent. Now credit of TCS will be given on TDS deducted from salary. Budget decriminalized delay of payment of TDS up to the due date of filing of TDS statement. Standard Operating Procedure soon for simplified and rationalized compounding guidelines for TDS defaults.

On Capital gains, short term gains shall henceforth attract a rate of 20 per cent on certain financial assets. Long term gains on all financial and non-financial assets to attract 12.5 per cent rate. Limit of exemption of capital gains has been increased to ₹1.25 Lakh per year to benefit lower and middle-income classes. Listed financial assets held for more than a year and unlisted assets (financial and non-financial) held for more than two years to be classified as long term assets. Unlisted bonds and debentures, debt mutual funds and market linked debentures will continue to attract applicable capital gains tax.

Big Bonanza For Bihar, Andhra 

In a notable display of 'coalition politics,' the inaugural Budget of the Narendra Modi 3.0 government has significantly favored Bihar and Andhra Pradesh. Finance Minister Nirmala Sitharaman unveiled a series of financial aids and development initiatives aimed at both states, which are pivotal to the NDA government's stability due to their respective 16 and 12 MPs.

For Andhra Pradesh, Sitharaman announced a substantial allocation of Rs 15,000 crore for development projects in the current financial year, with promises of additional funding in future years.

Turning to Bihar, the Finance Minister detailed a range of new projects, including the construction of new airports, medical colleges, and sports facilities. She assured the state that their requests for support from multilateral banks would be expedited. Additionally, Rs 26,000 crore has been set aside for highway development in Bihar, encompassing major projects such as the Patna-Purnia, Buxar-Bhagalpur, and Bodhgaya-Rajgir-Vaishali-Darbhanga Expressways, as well as a new two-lane bridge over the Ganga in Buxar. The budget also includes plans for a 2,400 MW power plant and the establishment of an industrial corridor node in Gaya.

For Farmers/Agriculture Sector

The Finance Minister announced that the government will undertake a comprehensive review of the agriculture research setup to bring the focus on raising productivity. New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers. In the next two years, 1 crore farmers across the country will be initiated into natural farming supported by certification and branding.

10,000 need-based bio-input resource centres will be established. For achieving self-sufficiency in pulses and oilseeds, government will strengthen their production, storage and marketing and to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower. Government, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years.

Employment & Skilling

The Finance Minister said that the government will implement 3 schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers. Government will also facilitate higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishing creches.

Referring to the Skilling programme, the Finance Minister announced a new centrally sponsored scheme, as the 4th scheme under the Prime Minister’s package, for skilling in collaboration with state governments and Industry. 20 lakh youth will be skilled over a 5-year period and 1,000 Industrial Training Institutes will be upgraded in hub and spoke arrangements with outcome orientation. She also announced that the Model Skill Loan Scheme will be revised to facilitate loans up to ₹7.5 lakh with a guarantee from a government promoted Fund, which is expected to help 25,000 students every year. For helping the youth, who have not been eligible for any benefit under government schemes and policies, she announced a financial support for loans upto ₹10 lakh for higher education in domestic institutions. E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3 per cent of the loan amount.

Urban Housing

Under the PM AwasYojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of  ₹ 10 lakh crore. This will include the central assistance of ₹ 2.2 lakh crore in the next 5 years.

Energy Security

The Finance Minister said, in line with the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain free electricity up to 300 units every month.

Infrastructure

The Finance Minister underlined that significant investment the Central Government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy. Government will endeavour to maintain strong fiscal support for infrastructure over the next 5 years, in conjunction with imperatives of other priorities and fiscal consolidation. ₹11,11,111 crore for capital expenditure has been allocated this year, which is 3.4 per cent of our GDP.  

'Opposition Has No Right To Question Budget'

Sitharaman dismissed the Opposition's criticism that the budget has accorded special treatment to states run by supporting parties, saying that those whose alliance got less than 230 seats have no right to question it as the Centre has provided funds to all states. On the issue of Rs 60,000 crore projects announced for Bihar and pledge to get multilateral assistance for the state and Andhra Pradesh, she said, Rs 1.5 lakh crore assistance has been promised for all states in the budget.

"The Indi alliance (Indian National Developmental Inclusive Alliance) together could not cross 230 seats while BJP alone has reached 240 and with the pre-election alliance, we have formed government comfortably under the leadership of Prime Minister Narendra Modi. This is historic," she said in a customary post-budget media briefing. Asked whether West Bengal is not mentioned in the Budget, she said, those who are claiming this, should read the speech carefully as the name features in the paragraph giving details of the Purvodaya scheme. "If the name of the state is not mentioned in the Budget speech that does not mean that it is not covered," she said.

"States in the Eastern part of the country are rich in endowments and have strong cultural traditions. We will formulate a plan, Purvodaya, for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh," she said in her Budget speech. This will cover human resource development, infrastructure, and generation of economic opportunities to make the region an engine to attain Viksit Bharat.