What To Expect From Budget 2024?

Have you ever wondered how India moved up from being the 10th to the 5th largest economy in just 10 years? The key is the Power of the Budget.

As India aims to become a top global economic player, everyone is watching Budget 2024, which Finance Minister Nirmala Sitharaman will present on 23rd July, 2024. This is her second Budget presentation in 2024. Her first, an Interim Budget, was presented on 1st February 2024 because of elections. This upcoming Budget, called the Union Budget, will explain the government's plans to keep the economy strong and growing.

Prashant Kumar, MD & CEO of YES Bank, says the Budget will focus on eight main areas: sustainable growth, the financial sector, infrastructure, women, youth and farmers, better connectivity, inclusive development, and overall economic growth. These are all key to achieving the goal of 'Viksit Bharat' (Developed India) by 2047.

Keep in mind, the first Budget of a new government often includes bold, game-changing decisions! In this blog, we’ll look at what changes Budget 2024 might bring.

Will this Budget Prioritize Infrastructure Again?

• Last year's Budget allocated 10 lakh crores to Infrastructure for the first time, and the 2024 Interim Budget increased it to over 11 lakh crores, earning appreciation from everyone. 

• Infrastructure includes many areas, but railways, defense and even housing are expected to receive the most funding.

• The Ministry plans to increase funding for the Railway Sector to reduce overcrowding and improve safety. 

• They also aim to hire three times more assistant loco pilots to reduce the workload and stress on current train crews.

• Investments will continue in railway infrastructure, metro expansion, high-speed routes, and safety improvements.

• The Budget plans to help local manufacturing by possibly bringing back the 15% tax rate for new factories.

Potential Tax Relief and Removal of Angel Tax?

• Angel Tax is basically a tax that is charged on the extra money a company makes when it sells shares at a price higher than the company's fair market value. This extra amount is treated as income and taxed.

• Rajesh Kumar Singh, Secretary of DPIIT, mentions the recommendation to remove the Angel Tax has been made before and possibly again this time. It is uncertain if this change will happen soon.

• Yogesh Kale, Executive Director at Nangia Andersen LLP, says the Modi 3.0 budget may have measures to please individual taxpayers.

• Taxpayers are hopeful for significant tax relief, with potential lower income tax rates for those earning below ₹10 lakhs and expected tax relief for those earning above ₹15 lakhs.

• The new tax regime is likely to include increased deductions and a higher basic exemption limit. To encourage more people to opt for these new tax rules, the standard deduction might be raised. Lower tax rates could also provide taxpayers with more disposable income.

• EY India suggests raising the basic exemption limit from ₹3 lakhs to ₹5 lakhs in the new tax system. 

• There is a strong call to raise the standard deduction limit due to rising living costs and inflation. EY experts suggest increasing it from ₹50,000 to ₹1 lakh.

• Raising the standard deduction limit (currently ₹50,000) could help salaried people and support the middle class while managing the budget carefully.

Agricultural Sector: Boosting Domestic Production of Pulses and Oilseeds

• The government might fully buy three types of pulses (Urad, Arhar, and Masoor) at the Minimum Support Price (MSP) to cut down on imports, encourage growing different crops, and boost farmers' income. 

• Currently, the government can buy up to 40% of these pulses, but it has bought very little so far. 

• A trial program will be started to pay farmers the difference between the market price and the MSP if market prices are lower.

• Expected increase in annual cash payments to small farmers from ₹6,000 to ₹8,000.

Welfare Schemes and Sustainability Focus 

• The government plans to introduce an Employment-Linked Incentive (ELI) scheme to create more jobs, focusing on labor-intensive sectors like toys, textiles, apparel, furniture, tourism, and logistics.

• Incentives may include tax relief, fewer regulations, subsidized skill training, and wage subsidies.

• The Ministry of Micro, Small and Medium Enterprises (MSME) sector could also be a key focus in the Budget, 2024. 

• More funding likely for job creation and rural housing schemes like MGNREGA, PM Awas Yojana, and PM Kisan Samman Nidhi.

• Promotion of compressed biogas (CBG) with better rates.

• New schemes for electric vehicle adoption.

• Facilitation of low-cost loans for green-certified buildings.

Amendments to the Insurance Act, 1938: 

• The government plans to introduce a bill to amend the Insurance Act, 1938 with the goal of achieving 'Insurance for All by 2047'. The proposed changes include: 

1. Composite licenses

2. Differential capital

3. Reduced solvency norms

4. Captive licenses

5. Updated investment regulations

6. One-time registration for intermediaries

Artificial Intelligence (AI)

• Government support needed for AI ventures with better funding access and easier regulations.

• AI is seen as a key driver for job creation and industrial growth.

Fiscal Goals

• The government aims to reduce the fiscal deficit to 5.1% of GDP.

• Likely to maintain or lower planned market borrowing for the year.

Budget 2024 is set to bring big changes to help boost India’s economy and improve infrastructure. With plans to invest in railways, support local manufacturing, and possibly reduce taxes, this budget aims to drive growth and create jobs. There are also proposals to help farmers and invest in green and tech industries. But will these plans meet our expectations and solve our biggest issues? One worry is that education and healthcare, which are crucial for development, don’t seem to be a major focus this time. As India aims to become a developed country, it is important to invest in all key areas. Will this Budget strike the right balance to ensure everyone benefits? We’ll have to wait and see on 23rd July, 2024 how these changes play out and what they mean for our future!