Modinomics 3.0 takes off with a balance

Turning attention to the full year and beyond, in this Budget, we particularly focus on employment, skilling, MSMEs, and the middle class. We announced 5 schemes to facilitate employment, skilling, and other opportunities for 4.1 crore youth over a 5-year period with a central outlay of Rs2 lakh cr - Nirmala Sitharaman, Finance Minister

Jobs In Focus:

• Handles political compulsions with funds to Bihar, AP
• All addl employment within salary of Rs1 lakh/pm will be counted
• Govt reimbursing to employers up to Rs3,000/pm for 2 years towards EPFO contribution
• Will facilitate higher participation of women in workforce
• Setting up of working women hostels in collaboration with industry
• In 5 yrs, 20 lakh youth will be skilled, 1,000 ITIs will be upgraded

New Delhi: In her record seventh consecutive Union Budget that she presented in Parliament on Tuesday, Finance Minister Nirmala Sitharaman managed to walk a tightrope, balancing political compulsions with economic imperatives. So, while key allies, the TDP and JD(U), responded positively to the announcements made for Andhra Pradesh and Bihar respectively, BSE Sensex was in the red, though slightly, as the Finance Minister ended her Budget speech. There is also some relief for the middle class in terms of increased standard deduction and simplification of the tax regime.

Even as she offered income-tax (I-T) benefits and developmental packages, she did not stray from the path of fiscal consolidation and capital expenditure. In fact, she has pegged a more ambitious fiscal deficit figure for Budget 2024-25, 4.9 per cent, than she had in the Interim Budget, 5.1 per cent. She said that the government aims to reach a deficit below 4.5 per cent next year. This means a continuous and substantive decline in the fiscal deficit in three years, from 6.4 per cent in 2022-23 to 5.6 per cent to 4.9 per cent.

Similarly, there has been no dip in infrastructure building. Sitharaman has provided Rs1,111,111 crore for capital expenditure -the same as it was in the Interim Budget. This would be 3.4 per cent of our GDP.

“Turning attention to the full year and beyond, in this Budget, we particularly focus on employment, skilling, MSMEs, and the middle class,” the Finance Minister said. She announced five schemes to facilitate employment, skilling, and other opportunities for 4.1 crore youth over a five-year period with a central outlay of Rs2 lakh crore.

She also announced a scheme that will provide one-month wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month salary in three installments to first-time employees, as registered in the Employees Provident Fund Organisation (EPFO), will be up to Rs15,000. The eligibility limit will be a salary of up to Rs1 lakh per month. The scheme is expected to benefit 210 lakh youth, she claimed.

For job creation in manufacturing, she announced another scheme to incentivise additional employment in the sector, linked to the employment of first-time employees.

“The scheme is expected to benefit 30 lakh youth entering employment, and their employers,” she said in her speech.

All additional employment within a salary of Rs1 lakh per month will be counted, with the government reimbursing to employers up to Rs3,000 per month for two years towards their EPFO contribution for each additional employee.

The government will facilitate higher participation of women in the workforce through setting up of working women hostels in collaboration with industry and establishing crèches.

Sitharaman also announced a new centrally-sponsored scheme for skilling in collaboration with State governments and industry. In five years, 20 lakh youth will be skilled and 1,000 industrial training institutes (ITIs) will be upgraded.

Further, she said, the Model Skill Loan Scheme will be revised to facilitate loans up to Rs7.5 lakh with a guarantee from a government-promoted fund. This measure is expected to help 25,000 students every year.

The Finance Minister packaged the politically-coloured Budget proposals in a plan, Purvodaya, for the all-round development of the eastern region covering Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. So, while Andhra Pradesh and Bihar have been denied the special category status their Chief Ministers demanded, they got good packages in the Budget.

For Andhra’s new capital, the Centre will facilitate special financial support through multilateral development agencies, she said. “In the current financial year, Rs15,000 crore will be arranged, with additional amounts in future years.”

She also committed to finance the Polavaram Irrigation Project. Grants for backward regions of Rayalaseema, Prakasam and North Coastal Andhra will also be provided.

Also, she said, funds will be provided for essential infrastructure such as water, power, railways and roads in the Kopparthy node on the Visakhapatnam-Chennai Industrial Corridor and the Orvakal node on the Hyderabad-Bengaluru Industrial Corridor.

Cabinet Minister and TDP leader Ram Mohan Naidu enthusiastically welcomed the measures. For Bihar, the Finance Minister announced plans for new airports, medical colleges, and sports and tourism infrastructure.

On income-tax front, she increased standard deduction for salaried employees from Rs50,000 to Rs75,000 and on family pension for pensioners enhanced from Rs15,000 to Rs25,000. “A salaried employee in the new tax regime stands to save up to Rs17,500 in income tax,” she said.

She abolished Angel tax for all classes of investors to bolster the startup ecosystem. Also, the Finance Minister simplified various taxes.

Three cancer drugs, 25 critical minerals, capital goods for use in manufacture of solar cells and panels, and various inputs for manufacture of shrimp and fish feed have been exempted from customs duty. Import duties on mobile phones, mobile Printed Circuit Board Assembly (PCBA), mobile chargers, and gold and silver have been reduced.