Union Budget Highlights: 2024

Since the interim budget presentation on February 1, 2024, there have been major changes in the political, economic, and financial landscape of the country. With the National Democratic Alliance (NDA) being elected once again for the third consecutive time, the full-fledged annual budget for the financial year 2024–2025 was unveiled on July 23, 2024. 

Building on the ‘Viksit Bharat 2047’ theme, the Union Budget presentation brought about numerous reforms in multiple segments of the Indian economy. Here are some of the key highlights from the Union Budget 2024 presentation.  

Union Budget Highlights: 2024

The theme of the budget for the financial year 2024–2025 revolves around four major aspects: employment, skilling, MSMEs, and the growing middle-class populace. The areas that the budget presentation focused on include the following:    

• Agriculture and Allied Sectors

Agricultural productivity and resilience were among the focal points of the presentation. The government aims to strengthen the sector by providing financial support to farmers, releasing 109 high-yielding and climate-resilient varieties of field and horticulture crops, improving supply chains, and encouraging natural farming and other sustainable practices. 

The budget also introduces a National Cooperation Policy for ensuring systematic and all-round development of the cooperative agriculture sector and Digital Public Infrastructure (DPI) for crop surveys in 400 districts. A total of Rs. 1.52 lakh crore has been earmarked for the agricultural sector for the financial year 2024–2025.   

• Employment and Skilling

Some of the key union budget highlights include the introduction of various initiatives and reforms to address unemployment and skill gaps, which are major hindrances to the nation’s economic growth. The financial year 2024–2025 will see the introduction of the Employment-Linked Incentive (ELI), designed to benefit lakhs of youth, and the creation of 50 lakh jobs. A couple of the ELI initiatives announced in the presentation are as follows: 

• A one-month wage incentive of up to Rs. 15,000 to fresh employees.
• Reimbursement of the employer portion of EPFO contributions of up to Rs. 3,000 per month for the first two years for all fresh employees. 

The government of India also aims to train 20 lakh youth over the course of five years and upgrade as many as 1,000 Industrial Training Institutes (ITIs). An internship scheme for 1 crore youth in top companies, designed to enhance employability and provide practical experience to the workforce, was also introduced. 

To increase the participation of women in the Indian workforce, the government is also planning to set up working women’s hostels and women-specific skilling programs. For industrial workers, dormitory-type rental housing will be facilitated in the Public-Private Partnership (PPP) mode.      

• Manufacturing and Services

Another crucial focal point of the budget presentation is Micro, Small, and Medium Enterprises (MSMEs). To empower MSMEs and fuel their growth, the Mudra loan limit has now been enhanced to Rs. 20 lakh from Rs. 10 lakh for businesses that have repaid previous Mudra loans. In addition to ensuring financing, the budget also provides for term loans for machinery purchases and financial packages for technological support for MSMEs. 

• Infrastructure Development

The budget’s key highlights include a significant allocation of Rs. 11,11,111 crore, amounting to 3.4% of the nation’s GDP, towards infrastructure development. Additionally, the union government also plans to issue Rs. 1.5 lakh crore to various states as long-term interest-free loans to support infrastructure activities. 

The presentation also touched upon improving rural connectivity to more than 25,000 habitations through Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY). The development of 12 industrial parks under the National Industrial Corridor Development Programme is also on the cards. These initiatives aim to boost economic activity, create jobs, and improve overall connectivity and logistics across the country.

• Energy and Environment

The budget also introduces initiatives for sustainable energy development. One of the measures includes providing financial support for micro and small-scale industries to shift from fossil fuels to cleaner energy. Additionally, the PM Surya Ghar Muft Bijli Yojana introduced in the interim budget 2024, has garnered 1.28 crore registrations with 14 lakh applications to date.  

The focus is also on nuclear energy development, with the government planning to set up Bharat Small Modular Reactors with cutting-edge technologies for extracting electricity from nuclear energy. These measures aim to enhance energy security, promote clean energy, and support India's climate change mitigation efforts.

• Direct Tax Reforms

The union budget highlights would not be complete without exploring the various tax-related reforms. For the financial year 2024–2025, there are significant changes to both the direct and indirect taxation systems. Here are some of the key tax reforms that were introduced in the presentation.  
 

• An increase in the Short-Term Capital Gains (STCG) tax rate from 15% to 20% on financial assets.
• An increase in the Long-Term Capital Gains (LTCG) tax rate from 10% to 12.5% on both financial and non-financial assets.
• An increase in the Long-Term Capital Gains (LTCG) exemption limit from Rs. 1 lakh to Rs. 1.25 lakh per financial year.
• The complete elimination of Angel Tax for all investor classes. 
• A reduction in the corporate tax rate for foreign companies from 40% to 35%. 
• An increase in the income tax basic exemption limit from Rs. 2.5 lakh to Rs. 3 lakh. 
• An increase in the Standard Deduction for individuals with salary income from Rs. 50,000 to Rs. 75,000. 
• An increase in the deduction available for individuals receiving family pensions from Rs. 15,000 to Rs. 25,000. 
• An increase in the Securities Transaction Tax (STT) on the sale of futures from 0.0125% to 0.02%.
• An increase in the Securities Transaction Tax (STT) on the sale of options from 0.01% to 0.02%.   

Along with the rise in the basic exemption limit, the new income tax slab rates have also been announced in the budget. Let us look at the new rates applicable for the financial year 2024–2025. 

Conclusion

It is clear from the union budget’s highlights that the government of India is planning to propel the country towards becoming a developed nation. With strategic tax reforms and an unwavering focus on key areas of the economy, the Union Budget 2024 aims to improve fiscal prudence and set the stage for sustainable and inclusive growth. 

If you would like to read about budget-related news or see how the budget presentation has impacted the stock market, head over to Motilal Oswal’s Research 360 platform. You can find all of the key news and announcements related to stocks, public issues, company results, currencies, commodities, and the economy as a whole. Additionally, you also get access to a host of other features, like a stock screener, fundamental and technical indicators, and sector analysis, among others.