FM shifts from trickle-down strategy to new schemes for unemployed youth, MSMEs, and middle-class tax cuts; sets fiscal deficit target at 4.9% of GDP; promises next-gen reforms ahead.
In her seventh Union Budget, Finance Minister Nirmala Sitharaman introduced measures to help unemployed youth, small businesses, and the middle class. She also announced investment projects for Bihar and Andhra Pradesh to strengthen the NDA coalition.
Sitharaman announced higher standard deductions and revised tax rates for salaried individuals under the new tax regime. Customs duties on gold, silver, mobile phones, and other goods were also reduced. The Centre’s FY25 Capex remains at ₹11.1 lakh crore, with infrastructure spending at 3.4% of GDP.
The revised tax rates under the new tax regime are:
Up to ₹3 lakh: No tax
₹3-7 lakh: 5%
₹7-10 lakh: 10%
₹10-12 lakh: 15%
₹12-15 lakh: 20%
Above ₹15 lakh: 30%
Ms. Sitharaman proposed income tax cuts of up to ₹17,500 a year, adding ₹1,458 monthly for those earning up to ₹12 lakh. She increased standard deductions by ₹25,000 for salaried taxpayers and ₹10,000 for pensioners. She also pledged ₹2 lakh crore over five years for five schemes to create jobs and skill 4.1 crore youth as part of the “Prime Minister’s package.”
Changing strategy
This marks a shift from the previous government’s reliance on trickle-down economics to direct support for society. A similar shift was seen in Arun Jaitley’s 2016-17 Budget.
To shed the “suit-boot sarkar” image, Arun Jaitley focused his 2016-17 Budget on farmers, the poor, and rural job creation. This time, the shift might be driven by the BJP’s recent electoral losses and concerns about big businesses’ electoral bond purchases
Focus on Employment
After her 90-minute speech, Finance Minister Nirmala Sitharaman highlighted that the main theme of Budget 2024-25 is ‘EMPLOYMENT.’ This includes:
Employment and Education
MSMEs
Productivity
Land
Opportunities
Youth
Middle Class
Energy Security
New Reforms
Technology
In her speech, Nirmala Sitharaman mentioned ’employment’ 23 times, up from three times in the 2023-24 Budget and seven in February. She discussed ‘jobs’ four times and the middle class three times, compared to fewer mentions before.
In her speech, Nirmala Sitharaman highlighted ’employment’ 23 times, a big jump from three times in the 2023-24 Budget and seven in February. She mentioned ‘jobs’ four times and the middle class three times, compared to fewer mentions previously.
Finance Minister Nirmala Sitharaman has aimed to boost private investment by accelerating fiscal consolidation, fueled by a ₹2.1 lakh crore dividend from the central bank. She set the fiscal deficit target at 4.9% of GDP this year, down from 5.1% in the Interim Budget and 5.6% last year. This move could reduce market borrowings, lower policy interest rates, and encourage private investment, says EY’s D.K. Srivastava.
READ: NDA GOVERNMENT TO PRESENT COMPREHENSIVE BUDGET FOR FISCAL YEAR 2024-25