New Delhi, July 23, 2024 — Prime Minister Narendra Modi has praised the Union Budget 2024-25 for bringing relief to the poor and middle classes. In a recent address, he pointed out several key programs for fostering inclusive growth and prosperity.
Tax Reforms for the Middle Class
The Prime Minister asserted that the budget introduced many major tax reforms aimed at relieving middle-income groups. The revised budget raised the standard deduction limit under the new tax regime to ₹75,000, thereby providing extra relief to taxpayers.
The combined simplification of Tax Deducted at Source (TDS) rules is intended in expected savings for individuals. They are designed to leave taxpayers with more disposable income, allowing them to spend, stimulate the economy, and promote growth.
Job Creation
The cornerstone is job creation. The new Employment Linked Incentive Scheme is meant to generate many jobs through a subsidy on the first month of salary of an individual beginning work. Payment under this scheme would be direct benefit transfers of one month’s wage alone, up to ₹15,000, done in three installments to first-time hires with membership in the Employees’ Provident Fund Organisation (EPFO).
The youth would be eligible for the scheme as long as their wages did not exceed ₹1 lakh/month. This scheme will translate to approximately 210 lakh youth beneficiaries.
Support to Micro, Small and Medium Enterprises (MSMEs)
A recognition of the MSME sector’s pivotal role in the economy, the budget proposes reforms to line up support for this sector. Under their Mudra Loan scheme, collateral-free loans are not limited only to MSMEs. With a doubling of the limit from ₹10 lakh to ₹20 lakh, this move intends to improve the ability of small business owners to access credit. It is anticipated for this to encourage entrepreneurship, subsequently leading to a boost in economic growth.
Infrastructure and Industrial Development
The cabinet explained some gigantic urban and industrial development plans in the budget; 12 new industrial nodes and the implementation of transit schemes in 14 major cities.
Focus on Education and Skill Development
It aims to empower the Neo Middle Class and allocates more budgetary headroom to education and skill development. Higher funding for educational initiatives and skill training programs aims to provide youth with the skills required to succeed in the rapidly changing job market. This effort resonates with the government’s vision to create an educated and skilled workforce.
Opposition’s Perspective
The hapless government faces music for the opposition. Rahul Gandhi, for instance, dubbed it a ‘certainly copy-paste’ with no relief for the common man and for giving undue favors to crony capitalists. Major allocations to states like Bihar and Andhra Pradesh have been criticized as politically driven charity for allies’ sake.
Public Response on the Capital Gains Tax Reforms
One of the more controversial aspects of the budget is the revision of the capital gains tax structure. The rate of capital gains tax on short-term is raised from 15% to 20%, while the long-term capital gains tax rate is increased from 10% to 12.5%. Additionally, the exemption limit for long-term capital gains on financial assets is raised from ₹1 lakh to ₹1.25 lakh per year. The changes evoked mixed reactions from the people; some feared investment being downtrodden.
The Union Budget 2024-25 comes as a symbolic commitment from the government to uphold inclusive growth through initiatives for the benefit of the poor and middle-class populations. With tax reforms, schemes to generate employment, assistance to MSMEs, and investments in education and infrastructure, the budget lays the groundwork for India’s economic future. The stakeholders will, however, keep a close watch on its effectiveness to achieve the desired outcomes as these initiatives play out.
