Union Budget of India 2024-2025: Key Highlights and Summary at glance

Union Budget 2024

The Union Budget of India, also referred to as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India.

The Government presents it on the first day of February so that it could be materialized before the beginning of the new financial year in April. Until 2016 it was presented on the last working day of February by the Finance Minister in Parliament.

The budget division of the Department of Economic Affairs (DEA) in the Finance Ministry is the nodal body responsible for producing the budget.

It is presented by means of the Finance bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India's financial year.

Presentation Date	February 1, 2024
Presented By	Finance Minister (FM) in the Lok Sabha
Budget Preparation	Department of Economic Affairs, Ministry of Finance
Budget Classification	Revenue Budget: Covers expected one-year income including taxes. Capital Budget: Focuses on government assets and liabilities, major expenses like infrastructure.
Budget Parts	Part A: Macroeconomic section with government schemes and priorities. Part B: Finance Bill, including taxation proposals such as income tax revisions.
Finance Bill	Classified as a Money Bill under Article 110 of the Constitution. The Speaker has the final authority on the designation of a bill as a Money Bill.

READ KEY FACTS AND CONSTITUTIONAL PROVISIONS- https://www.iasgyan.in/daily-current-affairs/union-budget-for-2023-24

Key Highlights of Union Budget 2024-2025

Capital Expenditure Share	23% of the overall budget; effective capital expenditure is 31% of the overall budget.
Impact of Higher Capital Expenditure	Generates income and employment, creating a virtuous cycle.
Major Source of Receipts for FY 2024-25	Borrowing (27%).
Tax Revenue Sources	Income tax (19%) and goods and services tax (18%) are significant due to post-COVID income generation.
Direct vs. Indirect Tax Collection	Direct tax collection is higher than indirect tax collection; direct taxes are progressive.
Trend in Tax Shares	Share of direct taxes has increased; indirect tax share remains stagnant or slightly increases.
Centre’s Net Tax Revenue	Increased due to the rise in the non-divisible pool of taxes.
State Share of Taxes	Largest expenditure category, followed by interest payments.
Interest Payments Impact	High-interest payments contribute to the debt-to-GDP ratio; decreases in fiscal and primary deficits observed.
Debt-to-GDP Ratio	Expected to decrease; higher interest payments may temporarily increase revenue expenditure but boost long-term capital expenditure.
Capital Expenditure Trend	Uniform increase over five years; effective capital expenditure decreased due to lower grants-in-aid.
Non-Tax Revenue	Increased uniformly over five years; recent PSU dividends, especially from RBI, added extra revenue buffer.
Comparison with Late 1970s and 1980s	Recent PSU dividends contrast with the past when government borrowing was used to refinance failing PSUs, leading to economic issues in the 1990s.

Overall Framework

5 Schemes for Employment and Skilling for 4.1 Crore Youth over a five-year period with a budgetary outlay of 2 lakh Crore.
48 lakh Crore for Education, Employment, and Skilling.

Building a Detailed Roadmap of Viksit Bharat - 9 Priorities

Productivity and Resilience in Agriculture
Employment and Skilling
Inclusive Human Resource Development and Social Justice
Manufacturing and Services
Urban Development
Energy Security
Infrastructure
Innovation, Research, and Development
Next Generation Reforms

Priority 1: Productivity and Resilience in Agriculture

Transforming Agriculture Research	Review of agricultural research to assess agro-varieties. Funding from both public and private sectors. Release of 109 new high-yielding varieties for cultivation.
Natural Farming	Incorporate 1 crore farmers into natural farming with certifications and branding. Implementation through scientific institutions and Gram Panchayats. Establish 10,000 need-based Bhartiya Prakritik Kheti Bio-input Resource Centres (BRCs).
Mission for Pulses and Oilseeds	Achieve self-sufficiency in pulses and oilseeds with a focus on storage and marketing. Promote Atmanirbharta in soybean, sorghum, sesame, mustard, and sunflower. Support Farmer Producer Organizations, cooperatives, and agro-startups. Develop Digital Public Infrastructure (DPI) with states; digital crop surveys in 400 districts. Include 6 crore farmers and their land in the farmer and land registry. Enable issuance of Jan Samarth-based Kisan Credit Cards in 5 states.
National Cooperation Policy	Develop the cooperative sector systematically and comprehensively. Allocate ₹1.52 lakh crore for agriculture and allied sectors.

Priority 2: Employment and Skilling

3 Schemes for Employment-linked Incentives as part of the Prime Minister’s package.

Based on the enrollment of EPFO registration.
Focus on first-time employees.
Support to employees and employers

Scheme	Details	Beneficiaries
Scheme A: First Timers	One-month wage benefit to individuals newly entering the workforce in all formal sectors.	210 lakh youths
	Direct Benefit Transfer of up to ₹15,000 in three installments for those registered in EPFO.
	Eligibility: Monthly salary up to ₹1 lakh.
Scheme B: Job Creation in Manufacturing	Incentives for additional employment in the manufacturing sector linked to first-time employee hiring.	30 lakh youths and their employers
	Incentives provided directly to employees and employers concerning EPFO contributions in the first four years.
Scheme C: Support to Employers	Covers additional employment across all sectors.	50 lakh persons
	Reimbursement of up to ₹3,000 per month for two years for EPFO contributions for each additional employee.
	Applicable for additional employment with a salary up to ₹1 lakh per month.

Program	Details
Skilling Programme	New centrally sponsored scheme in collaboration with State Governments and Industries to skill 20 lakh youths over five years. Upgrade 1,000 industrial training institutes using a hub-and-spoke model and align courses with industry skill needs and emerging requirements.
Skilling Loans	Facilitate loans up to ₹7.5 lakh with a guarantee from a government-created fund to support 10,000 students annually.
Education Loans	Provide financial support for loans up to ₹10 lakh for higher education in domestic institutions. Direct E-vouchers will be given to 1 lakh students with an annual interest subvention of 3%. For youth not eligible for other government benefits.

Priority 3: Inclusive Human Resource Development and Social Justice

Purvodaya: The initiative aims at comprehensive development in the Northeastern states, including Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. It focuses on enhancing human resource development, infrastructure, and generating economic opportunities to transform the region into a key driver for achieving a developed India (Viksit Bharat).
Amritsar Kolkata Development Corridor: Support for the industrial corridor development with a specific node at Gaya.

Ancient Centres of Economy - Vikas Bhi, Virasat Bhi:

Road Connectivity Projects in Bihar:

Patna-Purnia Expressway
Buxar-Bhagalpur Highway
Bodhgaya-Rajgir-Vaishali-Darbhanga route
Additional two-lane bridge over the river Ganga in Buxar

Total investment for these projects is ₹26,000 crore.
Power Projects: Power projects, including the 2400 MW power plant at Pir Payanti, are to be taken up at ₹ 21,400 Crore.
New Airports, Medical Colleges, and Sport Centres in Bihar will be constructed.
Andhra Pradesh Reorganisation Act: Special financial support of ₹15,000 crore will be provided for Andhra Pradesh through multilateral development agencies in the current financial year, with additional funds in future years. This includes recognition of the Polavaram Project for food and water security, financial support for the Visakhapatnam-Chennai and Hyderabad-Bengaluru Industrial Corridors, and grants for the backward Rayalseema region.
PM Awas Yojana: Provision of 3 crore additional houses in rural and urban areas under the PM Awas Yojana.
Women-led Development: Financial support of ₹3 lakh crore to enhance women's role in economic development.
Pradhan Mantri Janjatiya Unnat Gram Abhiyan: Improve the socio-economic conditions of tribal communities with saturation coverage of 63,000 villages benefiting 5 crore tribal people.
Augmenting Banking Services: Opening of more than 500 India Post Payment Bank branches in Northeastern states.
Rural Infrastructure Development: An outlay of ₹2.66 lakh crore.

Priority 4: Manufacturing and Services

Credit Guarantee Schemes for MSMEs	Facilitates term loans for machinery and equipment without collateral. Financing Fund covers up to ₹100 crore for larger loans; upfront and annual guarantee fees apply.
New Assessment Model for MSME Credit	Public Sector Banks will assess MSMEs based on digital footprints rather than traditional turnover criteria, focusing on formal accounting systems.
Credit to Stressed MSMEs	Government-promoted fund supports credit availability for MSMEs to prevent NPAs.
Mudra Loans	Cap increased to ₹20 lakh from ₹10 lakh for the “Tarun” category, available for those with a good repayment history.
Enhanced TReDS Onboarding	Reduced threshold limits from ₹500 crore to ₹250 crore for encashing trade receivable bills, benefiting 7,000 more MSMEs.
SIDBI Branches in MSME Clusters	Opening 24 new branches this year to cover 168 out of 242 MSME clusters, expanding direct credit services within three years.
MSME Unit for Food Irradiation & Quality	Financial support for 50 multi-product and food quality testing agencies.
E-Commerce Export Hubs	Establish hubs in Public-Private Partnership mode to assist artisans and MSMEs in international markets.
Internship in Top Companies	Internships provided in 500 top companies for 1 crore youths over five years, with a stipend of ₹5,000 per month and one-time assistance of ₹6,000. Companies to cover training costs and 10% of internship costs from CSR funds.
Industrial Parks	Develop plug-and-play model-based parks in 100 cities, with 12 under the Industrial Corridor Development Programme.
National Company Law Tribunals	Direct recovery of ₹3.3 lakhcrore to creditors; 28,000 cases involving over ₹10 lakh crore disposed of prior to admission.

Priority 5: Urban Development in Budget 2024

Cities as Growth Hubs:The budget emphasizes developing cities as growth hubs through economic and transit-oriented planning. Focus will be on sustainable peri-urban development with effective town planning schemes.
Creative Redevelopment Initiatives: A framework will be established for brownfield redevelopment to transform urban landscapes.
- This includes creating transit-oriented development plans for 14 cities with populations exceeding 30 lakh to align infrastructure development with urban growth.
Urban Housing under PM Awas Yojana 2.0:Allocates ₹10 lakh crore to address housing needs for 1 crore middle-class and poor families, with central assistance of ₹2.2 lakh crore over five years. Includes provisions for interest subsidies to support affordable housing loans.
Water Supply and Sanitation: Enhancements in water supply and sanitation services through partnerships with state governments and multilateral banks.
- Focus on water management, treatment, and solid wastemanagement in 100 large cities, including treated water use for irrigation and replenishing water bodies.
Support for Street Vendors:Aims to develop 100 weekly street food hubs in select cities over five years, enhancing street vendors' livelihoods and promoting local food economies.
Research & Development of Small and Modular Nuclear Reactors: Partnerships with the private sector to set up Bharat Small Reactors and develop new nuclear technologies.
- Government-appropriated funding will support these initiatives as part of the energy strategy for Viksit Bharat.

Viksit Bharat and the Role of Nuclear Energy

India aims for a ‘Viksit Bharat’ (Developed India) by 2047, with Net Zero emissions being a key com ponent of this vision. The goal of achieving net zero carbon emissions by 2070 directs the country’s ef forts towards strong, inclusive, and environmentally sustainable economic and energy growth. This under scores the significance of nuclear energy for India.

PM-Surya Ghar Yojana	Launched in February 2024 with ₹75,021 crore outlay. Aims to add 30 GW of solar capacity, reduce 720 million tonnes of CO2, and create around 17 lakh direct jobs.
National Offshore Wind Energy Policy	Notified in 2023, targeting offshore wind energy with identified zones and viability gap funding for an initial capacity of 1 GW.
Green Hydrogen Mission	Targets production of 5 MMT of green hydrogen by 2030. Provides financial incentives for electrolyzer manufacturing and production to reduce carbon emissions.

Priority 7: Infrastructure

Capital Expenditure:Capital expenditure multipliers are estimated to be 1.5 - 3 times larger than revenue expenditure multipliers.

Central Government Investments	CapEx support of ₹11,11,111 crore (3.4% of GDP) to continue prioritizing fiscal consolidation and multiplier effects.
State Governments Investments	Provision of ₹1.5 lakh crore in long-term interest-free loans to support state development priorities and resource allocation.
Private Investments	Promoted through Viability Gap Funding and enabling policies. Market-based financing framework to be introduced.
PM-Gram Sadak Yojana Phase IV	To provide all-weatherconnectivity for 25,000 rural habitations eligible due to population increase.
Irrigation and Flood Mitigation	Bihar: ₹11,500 crore for projects including Kosi-Mechi link and flood mitigation. Assam: Assistance for flood management related to Brahmaputra. Himachal Pradesh: Reconstruction and rehabilitation support. Uttarakhand: Assistance for cloudburst and landslide damage. Sikkim: Assistance for flash floods and landslides.
Tourism Development	Bihar: Vishnupad Temple and Mahabodhi Temple Corridors, Rajgir comprehensive development, and Nalanda revival. Odisha: Assistance to enhance tourism through scenic beauty, temples, wildlife sanctuaries, and beaches.

The Bilbao Effect, or Guggenheim Effect refers to the substantial urban renewal, revitalization, and economic growth that a city can experience though the development of landmark architectural projects.

Priority 8: Innovation research and development

Operationalise the “Anusandhan National Research Fund” for basic research and prototype development.

ANRF Establishment	Established by the Anusandhan National Research Foundation 2023 Act to promote R&D and innovation.
Objectives	Foster research and innovation in universities, colleges, and R&D labs. Provide strategic direction per NEP.
SERB Integration	The Science and Engineering Research Board (SERB) is subsumed into ANRF.
Collaborations	Forge industry, academia, and government collaborations.
Space Economy Growth	Target to increase the space economy by 5 times in the next 10 years.
Venture Capital Fund	₹1,000 crore fund to support research and innovation.
Recommendations from NITI Aayog	Spend 2% of GDP on R&D. Five institutions in top 100 globally. Improve marketing and dissemination. Create value addition centers for up-scaling technologies. Develop National Technology Data Bank. Invite international bids only if Indian quality is unmatched. Establish District Innovation Fund of ₹2 crore. Engage foreign experts in emerging R&D areas.

Priority 9: Next Generation Reforms

Andrew Leigh in his book “The Shortest History of Economics” has stressed on the fact that if the growth rate of education is less than that of growth rate of technology social economists take the dif ferent perspective of technology in reducing in equality.

Rural Land related actions will include :

Assignment of Unique Land Parcel Identification (ULPI) or Bhu- Aadhar for all lands.
Digitisation of cadastral maps.
Survey of map sub-divisions as per current ownerships.
Establishment of land registry and linking to the farmers registry.

Labour related reforms:

Services to labour: Wide array of services to labor including those for employment and skilling.
Comprehensive integration of e-Shram portal with other portals to facilitate one stop solution.

Capital and entrepreneurship reforms:

Financial sector vision and strategy: Financial sector vision and strategy document to be brought to prepare the sector in terms of size, capacity and skills. It will set the agenda for the next 5 years and guide the government, regulators and market participants.

According to the Down To Earth Report advanced economies have not been able to commit 100 billionUSD to developing economies. Out of this only 36.8% of the investment has been made towards climate adaptation. Recently major advanced economies especially the G7 countries came up with the Cornwall Consensus.

The Jan Vishwas (Amendment of Provisions) Act, 2023 is a significant legislative measure in India aimed at decriminalising certain minor offenses and enhancing the ease of living and doing business.

NPS Vatsalya:

NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started.
On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.

New Pension Scheme (NPS):

The Committee to review the NPS has made considerable progress in its work.
Solution to be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens.

The Union Budget-2024 presents a mixed bag of opportunities and challenges for India. While the government's focus on infrastructure development, agriculture, and social welfare is commendable, effective implementation and sustainable fiscal management are crucial for realizing the full potential of the budget

https://www.iasgyan.in/daily-current-affairs/editorial-analysis-24-july

UNION BUDGET 2024 AT GLANCE