Editor's Pick | Union Budget 2024-25: Small servings, many plates

Presenting her seventh Union Budget and the first after this year’s Lok Sabha election, Finance Minister Nirmala Sitharaman on Tuesday unveiled a flurry of measures aimed at fixing the woes of unemployed youth, small businesses, and the middle class, and sought to strengthen the ruling NDA coalition’s bonds with support for multiple investment projects in Bihar and Andhra Pradesh. Ms. Sitharaman proposed income tax rate cuts worth up to ₹17,500 a year, putting an extra ₹1,458 a month in the hands of these taxpayers, and hiked standard deductions for salaried taxpayers and pensioners by ₹25,000 and ₹10,000, respectively. She also vowed to spend ₹2 lakh crore over five years on five schemes which are part of what she called “the Prime Minister’s package”, aimed at spurring jobs and imparting skills to 4.1 crore youth. This marked a shift in strategy, or rather a frenetic changing of lanes ahead of a roundabout as drivers in the capital are prone to do, from the previous government’s preferred reliance on letting multiplier and trickle-down effects work while avoiding direct handouts to such sections of society. The trigger for the shift could be the BJP’s electoral reverses after a decade of outright majority in Parliament, preceded by revelations such as big businesses’ poll bond purchases. At a briefing after her roughly 90-minute speech, which appeared to acknowledge and begin addressing the perceived disenchantment among specific voter groups such as the young, the salaried class, farmers, and small entrepreneurs, Ms. Sitharaman made it clear that the overarching theme of Budget was ‘EMPLOYMENT’. Used as an acronym, the theme was spelt out — Employment and Education; Micro, Small and Medium Enterprises (MSMEs); Productivity; Land; Opportunities; Youth; Middle Class; Energy Security; New Generation Reforms; and Technology. Her speech referred to ‘employment’ 23 times, up sharply from three mentions of the word in the 2023-24 Budget, and seven (four of which were about past achievements rather than the future) in the interim Budget presented this February. Ms. Sitharaman said that her first priority would be to raise productivity and resilience in agriculture, followed by employment and skilling, inclusive human resource development and social justice. Infrastructure and next generation reforms also figure in the priorities, with the Minister promising more details about the latter through an economic policy framework to be formulated later, with a focus on fixing factors of productivity, including land, labour, capital, and entrepreneurship. She also announced a review of the Income Tax and Customs Acts, a simplification of Foreign Direct Investment norms, and a financial sector vision document for five years. The Finance Minister did provide some indirect support to private investments by accelerating the fiscal consolidation process, armed with a ₹2.1 lakh crore surprise dividend from the central bank. The fiscal deficit target for this year has been pegged at 4.9% of GDP from the 5.1% projected in the Interim Budget, and the 5.6% of GDP achieved last year. Among the PM’s employment package schemes is a plan to provide one year internships in 500 top companies to one crore youth over five years. It is not clear if this will subsume the Pradhan Mantri Kaushal Vikas Yojana 4.0 that was announced in the last Budget to “skill lakhs of youth within the next three years” with an on-the-job training component. Prime Minister Narendra Modi praised the Union Budget, saying it will empower all sections of society. But the Opposition alleged that States ruled by non-NDA parties had been ignored with a miffed Tamil Nadu Chief Minister M.K. Stalin saying he would boycott the NITI Aayog meet. The stock markets reacted negatively to the Budgetary provisions concerning additional tax burden on investors and closed in the negative territory led by losses in banking after experiencing high volatility. The reaction came on the proposal to raise capital gains tax, which has been viewed negatively by investors. The 5% increase in Short Term Capital Gains (STCG) tax may adversely impact short-term investors in the near term. The BSE Sensex, having seen intraday swing of more than 1,500 points, closed with a loss of 73.04 points at 80,429.04. Two key NDA allies, Andhra Pradesh and Bihar received a bonanza with A.P. to get ₹15,000 cr. for capital Amaravati, and Bihar ₹58,900 crore for development projects. In an editorial, The Hindu noted that the Budget is “a distinct attempt to tell India’s voters that it has heard the angst-ridden message from the country’s unemployed youth loud and clear.” But the overriding focus, it said is that Ms. Sitharaman’s Budget sticks to the government’s fiscal consolidation path, with the fiscal deficit proposed to be pared to 4.9% of GDP. To achieve this fiscal goal, it pointed out, the Minister has quietly set about paring spending on several social sectors including a cut in share of spending on the rural job guarantee scheme — MGNREGA — with the Budget Estimate pegging the spending on the scheme at a nine-year low share of 1.78% of overall outlay, down from 1.92% in the Revised Estimates for 2023-24. “Political compulsions, as expected, resulted in significant allocations for Bihar and Andhra Pradesh, the States with the BJP’s crucial allies in power. All told, Ms. Sitharaman seems to have balanced the political and fiscal compulsions to some extent,” it noted. The Hindu’s Editorials Shuffling the deck: On the Union Budget 2024-25 ​Democratic departure: On Joe Biden bowing out of the presidential race The Hindu’s Daily Quiz Which of the following parties is an ally of the NDA? TDP DMK LDF Trinamool Congress To know the answer and to play the full quiz, click here. [logo] Editor's Pick 24 July 2024 [The Hindu logo] [EP Logo] Editor's Pick 24 July 2024 In the Editor's Pick newsletter, The Hindu explains why a story was important enough to be carried on the front page of today's edition of our newspaper. [View in browser]( [More newsletters]( Union Budget 2024-25: Small servings, many plates [Presenting her seventh Union Budget]( and the first after this year’s Lok Sabha election, Finance Minister Nirmala Sitharaman on Tuesday unveiled a flurry of measures aimed at fixing the woes of unemployed youth, small businesses, and the middle class, and sought to strengthen the ruling NDA coalition’s bonds with support for multiple investment projects in Bihar and Andhra Pradesh. Ms. Sitharaman proposed income tax rate cuts worth up to ₹17,500 a year, putting an extra ₹1,458 a month in the hands of these taxpayers, and hiked standard deductions for salaried taxpayers and pensioners by ₹25,000 and ₹10,000, respectively. She also vowed to spend ₹2 lakh crore over five years on five schemes which are part of what she called “the Prime Minister’s package”, aimed at spurring jobs and imparting skills to 4.1 crore youth. This marked a shift in strategy, or rather a frenetic changing of lanes ahead of a roundabout as drivers in the capital are prone to do, from the previous government’s preferred reliance on letting multiplier and trickle-down effects work while avoiding direct handouts to such sections of society. The trigger for the shift could be the BJP’s electoral reverses after a decade of outright majority in Parliament, preceded by revelations such as big businesses’ poll bond purchases. At a briefing after her roughly 90-minute speech, which appeared to acknowledge and begin addressing the perceived disenchantment among specific voter groups such as the young, the salaried class, farmers, and small entrepreneurs, Ms. Sitharaman made it clear that the overarching theme of Budget was ‘EMPLOYMENT’. Used as an acronym, the theme was spelt out — Employment and Education; Micro, Small and Medium Enterprises (MSMEs); Productivity; Land; Opportunities; Youth; Middle Class; Energy Security; New Generation Reforms; and Technology. Her speech referred to ‘employment’ 23 times, up sharply from three mentions of the word in the 2023-24 Budget, and seven (four of which were about past achievements rather than the future) in the interim Budget presented this February. Ms. Sitharaman said that her first priority would be to raise productivity and resilience in agriculture, followed by employment and skilling, inclusive human resource development and social justice. Infrastructure and next generation reforms also figure in the priorities, with the Minister promising more details about the latter through an economic policy framework to be formulated later, with a focus on fixing factors of productivity, including land, labour, capital, and entrepreneurship. She also announced a review of the Income Tax and Customs Acts, a simplification of Foreign Direct Investment norms, and a financial sector vision document for five years. The Finance Minister did provide some indirect support to private investments by accelerating the fiscal consolidation process, armed with a ₹2.1 lakh crore surprise dividend from the central bank. The fiscal deficit target for this year has been pegged at 4.9% of GDP from the 5.1% projected in the Interim Budget, and the 5.6% of GDP achieved last year. Among the PM’s employment package schemes is a plan to provide one year internships in 500 top companies to one crore youth over five years. It is not clear if this will subsume the Pradhan Mantri Kaushal Vikas Yojana 4.0 that was announced in the last Budget to “skill lakhs of youth within the next three years” with an on-the-job training component. [Prime Minister Narendra Modi praised the Union Budget]( saying it will empower all sections of society. But the Opposition alleged that States ruled by non-NDA parties had been ignored with a miffed Tamil Nadu Chief Minister M.K. Stalin saying he would [boycott the NITI Aayog meet](. The stock markets reacted negatively to the Budgetary provisions concerning additional tax burden on investors and closed in the negative territory led by losses in banking after experiencing high volatility. The reaction came on the[proposal to raise capital gains tax]( which has been viewed negatively by investors. The 5% increase in Short Term Capital Gains (STCG) tax may adversely impact short-term investors in the near term. The BSE Sensex, having seen intraday swing of more than 1,500 points, closed with a loss of 73.04 points at 80,429.04. Two key NDA allies, Andhra Pradesh and Bihar received a bonanza with [A.P. to get ₹15,000 cr. for capital Amaravati]( and [Bihar ₹58,900 crore for development projects]( In an [editorial,]( The Hindu noted that the Budget is “a distinct attempt to tell India’s voters that it has heard the angst-ridden message from the country’s unemployed youth loud and clear.” But the overriding focus, it said is that Ms. Sitharaman’s Budget sticks to the government’s fiscal consolidation path, with the fiscal deficit proposed to be pared to 4.9% of GDP. To achieve this fiscal goal, it pointed out, the Minister has quietly set about paring spending on several social sectors including a cut in share of spending on the rural job guarantee scheme — MGNREGA — with the Budget Estimate pegging the spending on the scheme at a nine-year low share of 1.78% of overall outlay, down from 1.92% in the Revised Estimates for 2023-24. “Political compulsions, as expected, resulted in significant allocations for Bihar and Andhra Pradesh, the States with the BJP’s crucial allies in power. All told, Ms. Sitharaman seems to have balanced the political and fiscal compulsions to some extent,” it noted. The Hindu’s Editorials [Arrow][Shuffling the deck: On the Union Budget 2024-25]( [Arrow][​Democratic departure: On Joe Biden bowing out of the presidential race]( The Hindu’s Daily Quiz Which of the following parties is an ally of the NDA? - TDP - DMK - LDF - Trinamool Congress To know the answer and to play the full quiz,[ click here.]( [Sign up for free]( Today’s Best Reads [[Watch: Budget 2024 | What’s in it for agriculture?] Watch: Budget 2024 | What’s in it for agriculture?]( [[Budget 2024: What are ‘Bharat Small Reactors’ and small modular reactors?] Budget 2024: What are ‘Bharat Small Reactors’ and small modular reactors?]( [[Budget 2024: BJD flays Centre, says Odisha’s ‘special status’ demand ignored] Budget 2024: BJD flays Centre, says Odisha’s ‘special status’ demand ignored]( [[Budget 2024: Agriculture gets higher allocation; fertilizer, food subsidies slashed, farmers express concern] Budget 2024: Agriculture gets higher allocation; fertilizer, food subsidies slashed, farmers express concern]( Copyright© 2024, THG PUBLISHING PVT LTD. If you are facing any trouble in viewing this newsletter, please [try here]( Manage your newsletter subscription preferences [here]( If you do not wish to receive such emails [go here](