Introduction

The Indian Union Budget, also known as the Annual Financial Report (Article 112 of the Indian Constitution), is the country’s yearly budget. In India, people look forward to Budget Day with great excitement, as corporations and the public alike are eager to learn about the policies and programs that may be of use to them. When India’s finance minister presents the budget to Parliament, experts, lawmakers, and economists review it to figure out government’s goals and schemes.

Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 marking the first budget of the NDA government’s third term. This budget shows the strong and resilient nature of the Indian economy in the face of geopolitical difficulties. She said that the middle class, MSME, employment, and skill development are the main priorities of this year’s budget.  Nine key areas were also identified by her in order for achieving ‘Viksit Bharat’. These areas include infrastructure innovation, research, employment, human resource development, manufacturing, urban development, energy security, and next generation reforms.[1]

‘Ease of Doing Business’ and ‘Employment’ were the budget’s key themes. It included measures like a thorough review of the Income-tax Act, an income tax amnesty scheme, limited reassessment reopening, and incentives for employers to generate jobs. Additionally, it promoted foreign investments and the use of the Indian Rupee for overseas transactions by proposing a streamlined framework for foreign direct investment and overseas investment.[2]

Understanding Budget 2024

India’s 2024 budget includes large financial commitments which are aimed at boosting India’s economy in post-pandemic period. Increased funding for important areas like infrastructure, social welfare, healthcare, and education are amongst some of the major announcements. This budget shows dedication towards improving economic growth and public services by allocating strategic funds to a wide range of development projects.

Under the new income tax regime, the standard deduction for salaried employees will increase to ₹75,000 in FY25 from ₹50,000. The majority of the funding allocated to the Ministry of External Affairs under the Union Budget went toward Indian-supported initiatives in the region. Nepal and Sri Lanka have both seen an increased allocations from the previous year.[3] Key highlights of Budget 2024-25 were –

  • The government will create Purvodaya, a plan for the Eastern Region’s overall development that includes Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh.
  • In order to support women-led development, the budget allocates over 3 lakh crores for programs that benefit women and girls.[4]
  •  A comprehensive plan will be introduced by the government which will offer internships in 500 of the top companies to one crore youth in the next 5 years.
  • New hires in all formal sectors will receive a one-month salary in three instalments upto ₹15,000 which is anticipated to assist 210 lakh young people.
  • The model skill loan scheme will be updated to allow loans up to Rs 7.5 lakh with a government-sponsored fund guarantee. This model skill loan program that will assist 25,000 students annually. [5]
  • Angel tax will be eliminated for all investors to encourage the growth of start-ups and investments.
  • Precious metals, such as gold and silver, will become more affordable, and custom duty will be reduced to six percent.

Andhra Pradesh and Bihar were allotted the most funds among all the states. A total of ₹15,000 crore will be provided to Andhra Pradesh to support its capital Amravati’s development. Important infrastructure, including roads, trains, water, and electricity in the Kopparthy node of the Vishakhapatnam-Chennai Industrial Corridor and the Orvakal node of the Hyderabad-Bengaluru Industrial Corridor would be developed and Polavaram Irrigation Project would be completed. The Finance Minister also emphasized the government’s commitment to the Andhra Pradesh Reorganisation Act and promised funding for the state’s underdeveloped areas.

Plans for new sports facilities, medical schools, and airports in Bihar were made public. A new two-lane bridge over the Ganga in Buxar, as well as highways such as the Patna-Purnia, Buxar-Bhagalpur, and Bodhgaya-Rajgir-Vaishali-Darbhanga Expressways, have also been proposed worth Rs 26,000 crore. There were also announcements about an industrial corridor node and a 2,400 MW power plant which were to be established in Gaya.[6]

Sectoral Analysis of the Budget 2024

1) Agriculture

Strengthening the agricultural sector has been highlighted in the 2024 budget as a crucial part of India’s plan for economic development. The government wants to boost agricultural productivity and guarantee food security for all citizens by providing more funding. In 2024-25, the Ministry of Agriculture has been allocated almost 1.50 Lakh Crore which is about 2.7% of the total budgeted expenditure of the central government.

In this Budget research on agriculture is being transformed with the goal of concentrating on increasing productivity and creating climate-resilient varieties of seeds. A National Cooperation Policy will be introduced for the cooperative sector to grow in a systematic, structured, and complete manner. Focus on Atmanirbharta or self-sufficiency for oil seeds such as mustard, groundnut, sesame, soyabean and sunflower will be increased. Farmers will be able to cultivate 32 field and horticultural crops with 109 new, high-yielding, climate-resilient varieties of seeds. Government also aims to support FPOs, cooperatives, and new ventures for the supply chains that deal with the harvesting, storing, and marketing of vegetables. In the next two years, one crore farmers nationwide will be introduced to natural farming with branding and certification support 10,000 bio-input resource centers will be established based on need.[7]

2) Infrastructure

In order to promote growth and increase employment in the most populous nation on earth, the Government of India announced that it will invest a record 11.11 trillion rupees ($132.85 billion) in infrastructure during the fiscal year that ends in March 2025.

The interim budget that was presented in February prior to the national elections contained the same spending plan. Presenting the federal budget, Finance Minister Nirmala Sitharaman stated, “This would be 3.4% of our GDP (gross domestic product).” The government has allocated 1.5 trillion rupees for long-term infrastructure loans to the states for the current fiscal year.[8]

These infrastructure investments are expected to significantly accelerate economic growth. Improved transportation networks will streamline supply chains and logistics, boosting trade and overall economic activity in the country. Improved infrastructure will directly create jobs in the construction and related industries, while indirectly benefiting industries that will benefit from these enhancements. Urban development initiatives will also improve living conditions by expanding access to services and creating jobs in urban areas.

3) Healthcare

The Ministry has been given Rs 90,659 crore for 2024–2025. This serves a 13% increase over the updated 2023–24 estimates. Amounts allocated to the Department of Health and Family Welfare in 2024–2025 totals 97% of the Ministry’s funds. The amount allotted to the Department of Health Research is Rs 3,002 crore, a 4% increase over its projected spending for 2023–2024. Compared to updated estimates from 2023–2024, allocation to the PM – Ayushman Bharat Health Infrastructure Mission is 63% higher in 2024–2025.[9]

These budgetary allocations are anticipated to have a major positive impact on public health indicators throughout India. It is probable that improved public health initiatives will result in improved disease prevention and control. Increased access to healthcare services will make it possible for more people to seek necessary medical treatment without worrying about money. Promoting equal access to healthcare among underprivileged communities requires this shift.

Despite these encouraging prospects, a number of obstacles may prevent the budgetary allotments from being implemented effectively. Funding mismanagement, bureaucratic delays, and the need for qualified healthcare workers to staff newly constructed or renovated facilities some of the main challenges.

4) Education

The budget for education makes up 2.5 percent of the entire amount allocated to national spending for the year. However, when comparing the amount spent on education in other nations, it is significantly less than that of developed nations like the United States, which spends 6% of its GDP on education, and the United Kingdom, which spends 4.2 percent of its GDP on education. They fulfill the financial obligations for education that are set forth globally. Thus, there exists an opportunity for India to increase its budgetary allotment to education from a meagre 2.9% of its GDP to 6%.[10]

Some of the major expenditures of the department are Samagra Shiksha, Pradhan Mantri Poshan Shakti Nirman (PM-POSHAN) which replaced the Mid-Day meal scheme, autonomous bodies like The Indian Institute of Technology (IIT), the Indian Institute of Management (IIM), the Indian Institute of Science, Education, and Research (IISER) and Central Universities which will receive 77.5% of the total budget under the Department of Higher Education and the Ministry of Minority Affairs which creates programs like the Schemes for Education and Infrastructure Development in Minority Institutions like Madrasas.[11]

Positive Aspects of Budget 2024

Significant growth is anticipated as a result of focused infrastructure investments that will improve efficiency and connectivity in both urban and rural areas. In order to establish India as a significant manufacturing hub and to facilitate trade and attract foreign investment, infrastructure development is essential. Furthermore, the budget’s allocation of funds towards renewable energy indicates a desire to promote sustainability and innovation.[12]

Negative Aspects of Budget 2024

Furthermore, some of the budget’s projections might seem excessively optimistic, particularly when it comes to the GDP and job creation growth rates that are anticipated. The past underperformance of specific economic sectors raises concerns about the practicality of these goals in the absence of strict controls or backup plans.

Recommendations

  • According to a World Bank analysis, urbanization can boost growth, but if rural investments are not prioritized, it may increase inequality[13]. Given rising GDP growth, a balanced investment strategy that meets the needs of both urban and rural areas is critical.
  • Increasing allocation of funds in underfunded fields like education and healthcare as they have long-terms benefits.
  • Specific funding for sustainable agriculture, with an emphasis on enhancing supply chains, modernizing farming methods, and giving small-scale farmers better access to credit.
  • Utilizing Public-Private Partnerships to speed up projects related to healthcare, education, and infrastructure development. These collaborations can assist in filling in financial gaps and bringing in private sector knowledge for effective implementation.[14]
  • To make sure money is spent wisely, an effective system for tracking and assessing budgetary allotments must be established. Frequent evaluations and feedback systems can guarantee accountability in the use of public resources and assist in identifying areas that need improvement.

Conclusion

India needs to have a flexible and forward-thinking economic strategy in light of the rapidly shifting global environment. Although Budget 2024 is a positive start, there is still potential for development in areas like robust governance, targeted welfare, and environmental conservation. It’s critical that we continue to improve these strategies in order to guarantee inclusive and sustainable growth.

Budget 2024 has a great deal of potential to influence how India’s economy develops in the future by making targeted investments in important industries, encouraging sustainable growth, and improving social welfare. The main objective is to enhance the standard of living for all citizens of the country by promoting equitable development and providing focused funding for infrastructure, healthcare, education, and agriculture. Furthermore, it is expected that the focus on innovation and skill development will equip the workforce for new economic opportunities and give them a competitive edge in the global market. However, to maximize the impact of the budget, these initiatives must be implemented and monitored successfully. Budget 2024 has the potential to build a solid basis for a robust, equitable, and prosperous economy in the years to come if it is implemented well.

Author: Ishan Singh, a 2nd year student at Maharashtra National Law University, Nagpur

[1] Deeksha, Highlights of Budget 2024-2025: Focus on Employment & Skilling, MSMEs and Middle Class, Eastern Book Company, July 23, 2024,
https://www.scconline.com/blog/post/2024/07/23/highlights-budget-2024-2025-focus-on-employment-skilling-msmes-middle-class/

[2] Union Budget 2024-25: Key Tax Reforms and Relief Measures, Ministry of Information and Broadcasting, 26 JUL 2024 3:26PM, https://pib.gov.in/PressNoteDetails.aspx?NoteId=151961&ModuleId=3&reg=3&lang=1

[3] Budget 2024 highlights: New employment-linked incentives for employees; ₹1.48 lakh crore allocation for education, employment, skill, The Hindu, July 23, 2024 07:26 am

[4] SPEECH OF NIRMALA SITHARAMAN MINISTER OF FINANCE, July 23, 2024, https://www.indiabudget.gov.in/doc/budget_speech.pdf

[5] Santosh Mehrotra,Does the Budget Give Us Jobs?, The Wire, Aug 1,2024

[6] Nandini Singh, Budget 2024: What are the special packages for Bihar, Andhra Pradesh?, BS, Jul 23, 2024

[7] FOCUS ON AGRICULTURE RESEARCH SETUP FOR RAISING PRODUCTIVITY AND DEVELOPING CLIMATE RESILIENT VARIETIES, Ministry of Information and Broadcasting, 23 JUL 2024 12:58PM, https://pib.gov.in/PressReleasePage.aspx?PRID=2035588

[8] Siddhi Nayak, India keeps infrastructure spend target unchanged at record 11.11 trln rupees for 2024-25, Reuters, July 23, 2024 12:26 PM

[9] Demand for Grants 2024-25 Analysis Health and Family Welfare, August 1, 2024, Page 1

[10] Dr. Shubhasheesh Bhattacharya, Budget 2024: The educational angle, India Today, Jan 31, 2024

[11] Apoorva Ramachandra, Indian Budget Series: Budget for Education, 27-02-2024, https://www.cdpp.co.in/articles/indian-budget-series-budget-for-education

[12] Union Budget 2024-25 & Sustainability: India Inc Expectations, Outlook Planet,12 July 2024 10:46 pm, https://www.outlookbusiness.com/opinions/union-budget-202425-sustainability-india-inc-expectations-news-418150

[13] Urban Development, Apr 03,2023, https://www.worldbank.org/en/topic/urbandevelopment/overview

[14] Dewangi Sharma, India’s Push for Infrastructure Development, Invest India,February 23, 2024,

https://www.investindia.gov.in/team-india-blogs/indias-push-infrastructure-development