Union Budget 2024-25: A 10-lane Expressway for Viksit Bharat

With fiscal consolidation being the first priority of the government, nine other priorities have been set out in the Budget speech pertaining to productivity in agriculture, employment and skilling, human resource development, incentivising manufacturing and services sectors, urban development, enhancing energy security, strengthening infrastructure development, providing a boost to research and development, and finally setting out the vision for next-generation reforms.

Well-directed emphasis has been provided for employment generation, entrepreneurship, skilling, and the start-up platform. An amount of Rs 2 lakh crore is proposed to be spent over the next five years which would benefit more than 40 million budding entrepreneurs. The scheme to provide 10 million young Indians with internship prospects at large Indian companies with government support is a momentous step taken by the Finance Minister. The employment-linked incentive scheme for first-time employees blazes a new trail in government policy.

To give a further boost to Indian start-ups, the decision to abolish the so-called ‘angel tax’ is a welcome step that will foster growth and innovation. Micro, small, and medium enterprises (MSMEs) have been rightly given meaningful incentives that will enable millions of new businesses to take root on a sustainable basis. The overall capital expenditure momentum of the government that started in 2014 will continue, giving a boost to affordable housing, roads and expressways, railways and ports. Investment in infrastructure will be promoted through viability gap funding. A market-based financing framework is to be put in place.

Agriculture and rural development have been given the highest priority. Encouraging farmers to shift to high-priority items like pulses and oilseeds will not only put more purchasing power in their hands but will meet the growing consumer demand for these products and reduce dependence on imports. Large-scale clusters for vegetable production will be developed closer to major consumption centres and farmer-producer start-ups will be promoted for collection, storage and marketing.

The transition towards green energy has taken root in India and a road map is being formulated for moving industries from energy efficiency targets to lower emission targets. Appropriate regulations for transition of industries to the ‘Indian Carbon Market’ mode are to be put in place. Financial assistance is to be provided to MSMEs for shifting them to cleaner forms of energy.

The Budget proposals deal with diverse areas from space economy to the development of spiritual tourism. Empowering women has always been the focus of the government and several reforms have been announced for women backed up by an allocation of almost Rs 3 lakh crore. In collaboration with industry, women-specific skilling programmes are to be organised, apart from providing market access to women owned enterprises.

On the tax front, the Finance Minister has announced that there would be a comprehensive review of the Income Tax Act, 1961, with a view to make it concise, lucid and devoid of ambiguities which would reduce litigation. Apart from announcing the revival of the scheme for resolving pending disputes, the period for reopening past assessments has been drastically curtailed, which would bring some finality to past assessments within a period of five years.

Foreign companies that are planning to invest in India will be considerably benefitted with the reduction of the tax rate from 40% to 35%. Simplification of foreign direct investment rules would ensure further inflows of direct investment into the country. Withdrawal of the 2% equalisation levy and expanding the scope of safe harbour rules are steps in the right direction that would make India one of the most favourable investment destinations in the world.

Measures like rationalising the personal income tax rates would enhance disposable income for middle class citizens. The capital market has taken in its stride the rationalisation of short-term and long-term capital gains tax rates as well as the increase in the securities transaction tax for securities derivative trading. The change in the customs duty structure will facilitate domestic manufacturing, promote exports, reduce prices for cancer drugs and mitigate disputes with the department.

The Budget presents a well-defined strategy that balances multiple objectives of reducing fiscal deficit as well as government debt while sustaining robust public investment in critical sectors of the Indian economy. International credit rating agencies are bound to take cognisance of the strong fiscal foundation that is sought to be laid, while fostering sustainable growth with massive capital investment.

A solid foundation has been laid based on the trinity of fiscal prudence, public investment, and inclusive growth. This multi-dimensional approach adopted by the Finance Minister will enable India to meet the challenges of the current fragile global economic environment. It is internationally recognised that India is the bright star on the horizon, and it will march forward with renewed vigour on its path to becoming a developed nation and the third-largest economy in the world by 2030. 

The writer is a senior corporate lawyer and tax expert. Views are personal