Amid India’s economic growth slipping to a four-year low, Finance Minister Nirmala Sitharaman on Saturday tabled her eighth consecutive budget in the Parliament announcing major tax relief for the middle class.
Presenting the NDA government’s first full-year budget in the third term, she also announced several key initiatives for Bihar, where assembly elections will be held later this year.
In her speech, Sitharaman outlined agriculture, MSMEs, investment and exports as the “four engines of development” and “reforms as the fuel.”
Here are the major takeaways from the budget.
Income tax rejig for the middle class
The finance ministry has increased the income tax exemption limit to Rs 12 lakh. The revised tax rate, under the new tax regime, would be as follows:
The timeline to update tax returns has also been extended from two years to four years.
The move comes just a few days after social media erupted with memes targeting the FM for allegedly imposing high taxes. In her budget speech, Sitharaman said that her government “is committed to keeping an ear to the ground and a finger on the pulse, and responding while balancing our nation-building efforts.”
She also said that in the last ten years, her government had brought in several reforms for the convenience of taxpayers, and with the unveiling of a new income tax bill next week, filling taxes would become easier.
Big boost for Bihar
The budget listed several infrastructure projects and initiatives for Bihar, where the BJP shares power with its NDA ally, the JDU. To provide “a strong fillip to food processing activities in the entire eastern region,” the central government will set up a National Institute of Food Technology, Entrepreneurship and Management in Bihar.
The government has announced that it will develop greenfield airports in the state apart from expanding the Patna airport and the brownfield airport in Bihta. It further announced setting up a Makhana Board to improve production, processing and marketing of fox nuts in the state.
The FM also announced a canal project for the Mithilanchal region and the expansion of IIT Patna.
Jobs for youth?
In her speech, the finance minister did not roll out any new scheme aimed at job creation, even as the Opposition has targeted her government for rising unemployment in the recent past.
The government also did not increase spending on the flagship rural job guarantee programme. At Rs 86,000 crore, the budget allocation for the Mahatma Gandhi National Rural Employment Guarantee Act remained the same as last year.
The government, however, announced setting up five National Centres of Excellence for Skilling for the youth. With an outlay of Rs 500 crore, it will also set up a Centre of Excellence in Artificial Intelligence for Education.
A social security scheme for gig workers will also be rolled out. The government will also maintain a national registry of one crore gig workers and issue them identity cards, the FM said.
Little infrastructure push?
To boost infrastructure development, the union government will provide 50-year interest free loans to states worth Rs 1.5 lakh crore.
The government will also direct relevant ministries to come up with a three-year pipeline of infra projects and implement them in partnership with private entities. The FM’s budget speech did not mention any other initiative aimed at infrastructure development.
The government has also revised its capital expenditure for 2024-2025 to Rs 10.18 lakh crore, down from the previous Rs 11.1 lakh crore which could impact some infrastructure projects.
Thrust on reforms
Pushing for reforms, the government increased the FDI limit for the insurance sector from 74 to 100 per cent.
“To strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business,’” the government will also set up a high-level committee for regulatory reforms. The committee will review non-financial sector regulations, certifications, licenses, and permissions and make its recommendations within a year.
The government said it will also set up a forum for regulatory coordination and development of pension products.
Push for manufacturing sector
The government has also doubled the credit guarantee cover for micro, small and medium enterprises from Rs 5 crore to Rs 10 crore. It said the move will help 1 crore registered MSMEs that employ over 7.5 crore people.
The government will also give customised credit cards with a Rs 5 lakh limit to micro enterprises registered on Udyam portal, the FM said.
Apart from this, the government will launch a new scheme for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs, and provide term loans up to Rs 2 crore in the next five years.
New schemes for agricultural sector
While the FM recognised agriculture as one of four engines of driving India’s development, she only increased the allocation for the agriculture and farmers’ welfare ministry by four percent.
Sitharaman, however, announced several new initiatives for the sector. Run in partnership with states, the Prime Minister Dhan-Dhaanya Krishi Yojana will cover 100 low productivity districts and benefit 1.7 crores, she said. The scheme will focus on enhancing agricultural productivity, adopting crop diversification and sustainable agriculture practices, facilitating availability of long-term and short-term credit among other measures.
Focusing on rural women, young farmers, marginal and small farmers, and landless families, the government will also launch a multi-sectoral ‘Rural Prosperity and Resilience’ programme to address underemployment in agriculture.
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