Budget 2024
full of new job creation incentives, tax concessions and announcements for Bihar & Andhra
By Manohar Manoj
While presenting the first budget of the third term of the Modi government, Finance Minister Nirmala Sitharaman indicated that the Modi government is now going to take the problem of unemployment very seriously. At the very beginning of the budget speech, a series of announcements were made regarding various incentives for employment generation, continuing a continuous campaign for the skill development of crores of young workers in the country and encouraging self-employment and entrepreneurship. Due to the unprecedented increase in the economic growth rate this time it was possible to bring a reduction in the gap between the income and expenditure of the government, more allocation of funds for basic and priority sectors and encouragement for new sectors of the economy. The budget speech of the Finance Minister was full of announcing many concessions in both direct and indirect taxes in the budget, where the income limit under the new income tax regime was increased, the preferential exemption limit of the salaried class was increased from fifty thousand to seventy-five thousand, waiver of customs tax on cancer medicines and also all minerals used in defense, nuclear and space equipment sector were completely exempted from import duty.
The third important point of the budget was that it was full of announcements to satisfy NDA’s two allies, Bihar’s JDU and Andhra Pradesh TDP.
From the very beginning of her budget speech, Finance Minister Nirmala Sitharaman was seen taking all-round initiatives regarding employment generation. Under this, the impetus was more on market-generated employment, therefore many steps were announced to encourage employment creation in the market linked with massive skill development programs and under this, the finance minister announced three major things. First one crore youth would be provided internship for one year in top 500 companies of India along with one time 6000 and monthly stipend of 5000/. Out of these companies have to bear ten percent cost and training cost out of their CSR fund. The second announcement was made that was providing 3000 per month for a year to the employers as their contribution to EPF, just to incentivize them to create more employment. It is estimated around 2.1 crore youth would be benefitted. The third announcement was made that govt. would pay 15000 to all first-time subscribers to the EPFO in three installments. These announcements have been made for those whose salary is not more than one lakh and they must not be from IIT and IIM. To promote skill development in a big way, the announcement was made regarding the upgradation of 1000 ITIs.
The purpose of giving a new impetus to skill development is to bring balance between the new demand and supply of employment in the labor economy. To promote the self-employment of less educated youth, the limit of Mudra loans has been also increased from ten lakhs to twenty lakhs. This includes an important announcement of exempting the angel tax for start-up businesses done by the technically literate youth of the country. The first budget of the third term of the Modi government states that the economic scenario of the country has improved in many ways, the economic growth rate is more than eight percent in real terms and the overall growth rate is crossing nine percent. Its consequently the total budget size is Rs 48 lakh crore this time. In this, the receipt from taxes is Rs 25 lakh crore and the remaining amount is being met from market borrowing and budget deficit.Apart from touching many aspects related to employment, skill development and human resource development, It has been said in the budget that an education loan of Rs 10 lakh will be provided at a very concessional rate to the admission seeker students in the country’s domestic educational institutions. It is noteworthy that even the Economic Survey points out the prerequisites of creating 80 lakh jobs per year. Under the new income tax slab announced in the budget, taxpayers have to pay zero tax on income up to Rs 3 lakh, five percent on income of 3 to 7 lakhs, ten percent on income of 7 to 10 lakhs, fifteen percent on income of 10 to 12 lakhs, twenty percent on income of 12 to 15 lakhs and thirty percent on income above 15 lakhs. Salaried income taxpayers will now get tax exemption on additional income of Rs 75 thousand instead of Rs 50 thousand. In the budget, the minimum amount of family pension was increased from Rs 15 thousand to Rs 20 thousand.Overall, these two steps will benefit four crore salaried and pensioners.It is worth noting that due to the new tax exemptions in the budget, the government will suffer a revenue loss of Rs 29,000 crore in direct taxes and Rs 8,000 crore in indirect taxes, while the new tax proposals will generate new revenue of Rs 30,000 crore. The total effective loss would be Rs 7 thousand crores. It is noteworthy that the amount of Rs 10 lakh crore allocated for the government’s capital expenditure in the last budget has been increased to Rs 11.11 lakh crore this time. The scheduled fiscal deficit of the last financial year has reduced from 5.8 percent to the actual 5.5 percent now. The fiscal deficit target for the year 2024-25 has also been reduced to 4.9 percent. The budget calls for further simplification of the indirect tax GST and further expansion of the scope of the new regime of income tax and corporation tax.Nirmala Sitharaman said that now two-thirds of the income tax and about 58 percent of the corporation tax is being received from the new tax regime. This means that taxpayers are getting more savings from the option of the new income tax system which was introduced in the last budget. It is noteworthy that as per the government’s policy of reducing the amount of taxes and earning more revenue, this time in the budget the corporation tax of foreign companies based in India has been reduced from 40 percent to 35 percent.The budget re-announced the plan to generate up to 300 units of electricity for one crore households under the new rooftop solar energy scheme. It reflects the government’s vision for future energy security in India. One very important point of the budget that has been seen is to give a new direction to religious tourism.Under this, like Varanasi Vishwanath Corridor, a new tourist corridor between Vishnapada Temple and Mahabodhi Temple in Gaya Rs 1 lakh crore has been proposed in the budget. It includes the development of Nalanda Rajgir as a world-class tourist center. In the budget, a new policy statement of comprehensive industrial and infrastructure development for Bihar, Jharkhand, Bengal, Odisha and Andhra of North-East India was announced which would be linked with the resolution of Developed India by 2047.In this sequence, the Finance Minister has given a big political gift to Bihar by announcing three expressways at the cost of 26 thousand crore, two Ganga bridges including Buxar and an ambitious program for flood control of Kosi at the cost of 11 thousand crore. Apart from this budget said that Rs 15,000 crore would be arranged for the establishment of new capital for Andhra Pradesh, through multilateral loan agencies. Special central assistance for the agriculture and fisheries development of the state and the construction of a new industrial corridor between Visakhapatnam to Chennai were also announced.It is important that the Center has announced in the budget to provide interest-free loans for fifty years to the states and an additional amount of about Rs 1.5 lakh crore to encourage investment in infrastructure. From this budget, those who had hoped for an increase in farmers’ honorarium and also the announcement for the free treatment of people above 70 years of age, could not be fulfilled.