Highlights of Union Budget 2024 for UPSC Prelims and Mains exam
Union Finance Minister Nirmala Sitharaman delivered the Union Budget 2024 on Tuesday, emphasizing the four key focus areas of the first budget under the Modi 3.0 government: ‘Garib’ (Poor), ‘Yuva’ (Youth), ‘Annadata’ (Farmer), and ‘Nari’ (Women). In her 7th Union Budget address, the finance minister highlighted that this year’s budget aims to focus on nine priorities, including productivity and resilience in agriculture, employment and skill development, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms.
- AGRICULTURE
- The Union Budget 2023-24 allocated 1.52 Lakh Crore to the agriculture and allied sectors.
- – Introduction of new strains: Farmers will have access to 109 new high-yielding and climate-resilient varieties of 32 field and horticulture crops.
- – Adoption of Natural Farming: Over the next two years, 1 crore farmers nationwide will be introduced to natural farming. The government plans to set up 10,000 need-based Bioinput research centers.
- The government, in collaboration with states, will support the implementation of Digital Public Infrastructure (DPI) in agriculture over a three-year period. Additionally, Jan Samarth-based Kisan Credit cards will be made available in five states with the government’s support.
- EMPLOYMENT AND SKILLING
- The government has allocated Rs 1.48 lakh crore for education, employment, and skill development. It plans to roll out five schemes aimed at providing employment opportunities and benefiting 4.1 crore young individuals, with a total budget of Rs 2 lakh crores.
- Additionally, three new incentive schemes linked to employees will be introduced:
- (i) Scheme A will facilitate the direct transfer of one month’s salary for first-time employees, benefiting an estimated 210 lakh youths.
- (ii) Scheme B focuses on creating jobs in the manufacturing sector, expected to benefit 30 lakh youths entering employment, along with their employers.
- (iii) Scheme C is an employer-centric initiative aimed at incentivizing the additional employment of 50 lakh individuals across all sectors.
- Furthermore, the government has unveiled a new centrally sponsored skilling scheme in collaboration with states and industry. This initiative aims to skill 20 lakh young individuals over the course of five years.
- HUMAN RESOURCE DEVELOPMENT AND SOCIAL JUSTICE
An extensive strategy is being devised for the comprehensive growth of the eastern region of the country, encompassing Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. This plan will focus on enhancing human resources, building infrastructure, and creating economic opportunities to transform the region into a driving force for achieving Viksit Bharat.
The Amritsar Kolkata Industrial Corridor will facilitate the establishment of an industrial center in Gaya. Furthermore, road connectivity projects such as the Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali, and Darbhanga spurs, and an additional 2-lane bridge over river Ganga at Buxar will be developed at a total cost of `26,000 crore.
Under the Andhra Pradesh Reorganization Act, special financial aid will be provided through multilateral development agencies, with an initial allocation of Rupees 15,000 crore in the current fiscal year and additional funding in the following years. Emphasis will be placed on financing and expediting the completion of the Polavaram Irrigation Project, as well as providing funds for essential infrastructure in nodes along the Vishakhapatnam-Chennai and Hyderabad-Bengaluru Industrial Corridors.
The Pradhan Mantri Janjatiya Unnat Gram Abhiyan will be launched to uplift the socio-economic status of tribal communities in tribal-majority villages and aspirational districts. Additionally, over 100 branches of India Post Payment Bank will be established in the North East Region.
4. MANUFACTURING AND SERVICES
For MSMEs
- Development of a comprehensive package that includes funding, regulatory adjustments, and technological assistance for MSMEs to facilitate their expansion and enhance their global competitiveness.
- Establishment of a Credit Guarantee Scheme specifically for MSMEs in the Manufacturing Sector, enabling them to acquire machinery and equipment without the need for collateral or third-party guarantee. Additionally, a self-financing guarantee fund will be created to offer guarantee cover up to ` 100 crore to each applicant.
- Implementation of a new evaluation model for MSME credit, where public sector banks will enhance their internal capacity to assess MSMEs for credit, reducing reliance on external assessments.
- Provision of credit support to MSMEs during challenging periods, such as when they are in the ‘special mention account’ (SMA) stage due to uncontrollable factors. This support aims to help MSMEs sustain their operations and avoid falling into the non-performing asset (NPA) stage.
- Entrepreneurs who have previously taken and fully repaid loans under the ‘Tarun’ category will now be eligible for an increased Mudra loan limit of Rupees 20 lakh, up from the current Rupees 10 lakh.
- The turnover threshold for mandatory onboarding on the TReDS platform for buyers will be reduced from Rupees 500 crore to Rupees 250 crore.
- SIDBI will establish new branches in order to expand its reach and provide direct credit to all major MSME clusters within 3 years.
- Support will be provided for the establishment of 50 multi-product food irradiation units and 100 food quality and safety testing labs with NABL accreditation.
- E-Commerce Export Hubs will be established in public-private-partnership (PPP) mode to facilitate the sale of products by MSMEs and traditional artisans in international markets.
- To promote Manufacturing & Services, 1 crore youth will have the opportunity to intern in 500 top companies over the course of 5 years. Companies will be expected to cover the training cost and 10 percent of the internship cost from their CSR funds.
For promotion of Manufacturing & Services
- Over the course of 5 years, provide internships in 500 leading companies for 1 crore young individuals. (The companies will be required to cover the training expenses and 10% of the internship costs from their CSR funds.)
- – The government will support the development of investment-ready industrial parks with complete infrastructure in or near 100 cities, in collaboration with states and the private sector. (Also, consider the National Industrial Corridor Development Programme)
- – Provision of rental housing with dormitory-style accommodation for industrial workers.
- – Proposal for digital public infrastructure applications in credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.
- – Establishment of a Critical Mineral Mission for domestic production, recycling of critical minerals, and acquisition of critical mineral assets overseas.
- – Extension of the services of the Centre for Processing Accelerated Corporate Exit (C-PACE).
- – Launching the auction of the first tranche of offshore blocks for mining by the government.
- – Creation of an Integrated Technology Platform for the IBC eco-system.
- – Initiation of appropriate changes to the IBC, reforms, and strengthening of the tribunal and appellate tribunals to expedite insolvency resolution.
5. URBAN DEVELOPMENT
PM-AWAS Yojana Urban 2.0
- The PM Awas Yojana Urban 2.0 aims to address the housing needs of 1 crore urban poor and middle-class families with a total investment of ₹10 lakh crore.
- It will include central assistance amounting to ₹2.2 lakh crore over the next 5 years.
- A system for interest subsidies is planned to encourage loans at affordable rates.
- Additionally, laws and regulations will be introduced to enhance efficient and transparent rental housing markets, increasing supply.
Water Supply and Sanitation
- We will work with state governments and multilateral development banks to support water supply, sewage treatment, and solid waste management projects and services for 100 major cities through financially viable initiatives.
- These initiatives will also involve utilizing treated water for irrigation and filling tanks in nearby areas.
Street Markets
The PM SVANidhi Scheme has brought about a positive change in the lives of street vendors. The government aims to support the creation of 100 weekly haats or street food hubs over the next five years.
Stamp Duty
States will be urged to transition from high stamp duty rates to more moderate ones for all, and to also explore reducing charges further for properties bought by women. This will be a crucial aspect of urban development strategies.
6. ENERGY SECURITIES
Development of Nuclear Energy
The government will collaborate with the private sector to:
(1) Establish Bharat Small Reactors,
(2) Conduct research and development for Bharat Small Modular Reactor, and
(3) Innovate new technologies for nuclear energy.
Solar Power (PM Surya Ghar Muft Bijli Yojana)
- The PM Surya Ghar Muft Bijli Yojana, as stated in the interim budget declaration, has initiated the installation of rooftop solar plants, providing free electricity to 1 crore households for a maximum of 300 units per month.
Pumped Storage Policy
- A plan will be created to support the advancement of pumped storage initiatives for storing electricity and to enable the seamless incorporation of the growing proportion of renewable energy, despite its fluctuating and sporadic nature, into the broader energy portfolio.
Advanced Ultra Super Critical Thermal Power Plants
- The collaboration between NTPC and BHEL has successfully achieved the advancement of indigenous technology for Advanced Ultra Super Critical (AUSC) thermal power plants, culminating in the establishment of a full-scale 800 MW commercial plant.
- Furthermore, the establishment of domestic capabilities for manufacturing high-quality steel and other advanced metallurgical materials for these plants will yield substantial economic advantages.
Roadmap for ‘hard to abate’ industries
- A plan will be created to shift the ‘hard to abate’ industries from focusing on ‘energy efficiency’ to prioritizing ’emission objectives’.
Support to traditional micro and small industries
- We will fund an investment-grade energy audit for conventional micro and small businesses, like brass and ceramic, and offer financial aid to help them switch to cleaner energy sources and implement energy-saving practices.
- The strategy will be reproduced in another 100 clusters in the following phase.
7. INFRASTRUCTURE
- Budget Allocation: The government has earmarked 11,11,111 crore for capital expenditure, equivalent to 3.4% of our GDP.
- Rural Connectivity: Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will be initiated to ensure all-weather connectivity to 25,000 rural settlements.
- Water Management: Financial assistance will be provided for projects such as the Kosi-Mechi intra-state link, with an estimated cost of 11,500 crore, through the Accelerated Irrigation Benefit Programme and other sources.
- Tourism Development: The Vishnupad Temple in Gaya and Mahabodhi Temple in Bodh Gaya, Bihar, will undergo development similar to the Kashi Vishwanath Temple Corridor to elevate them into world-class pilgrimage and tourist destinations. Comprehensive development strategies will also be implemented for Rajgir and Nalanda in Bihar, along with assistance for important destinations in Odisha.
8. INNOVATION AND RESEARCH & DEVELOPMENT
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- Fundamental research and prototype: The government has chosen to activate the Anusandhan National Research Fund for fundamental research and prototype creation.
- Space Industry: In order to grow the space industry by 5 times over the next 10 years, the government has opted to establish a venture capital fund of 1000 crore.
9. NEXT GENERATION REFORMS
Reforms related to rural and urban land:
1. All lands will be assigned a Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar.
2. Cadastral maps will be digitized.
3. Survey of map sub-divisions will be conducted according to current ownership.
4. A land registry will be established.
5. Linking to the farmers registry will be implemented.
6. Urban land records will be digitized with GIS mapping.
Reforms related to labor:
1. The e-shram portal will be comprehensively integrated with other portals to provide a one-stop solution.
2. Shram Suvidha and Samadhan portals will be improved to simplify compliance for industry and trade.
Climate finance taxonomy:
A taxonomy for climate finance will be developed to increase the availability of capital for climate adaptation and mitigation.
Foreign Direct Investment and Overseas Investment:
The rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified to facilitate FDI, prioritize, and promote opportunities for using the Indian Rupee as a currency for overseas investments.
NPS Vatsalya:
A plan for contributions by parents and guardians for minors will be initiated, which can be seamlessly converted into a normal NPS account upon reaching the age of majority.
Ease of Doing Business:
The government is working on the Jan Vishwas Bill 2.0 to improve the ease of doing business. States will also be incentivized for implementing their Business Reforms Action Plans and digitalization.
New Pension Scheme (NPS):
The Committee reviewing the NPS has made significant progress in its work. A solution addressing relevant issues while maintaining fiscal prudence to protect common citizens will be developed.
10. Tax-Related Proposals
In the new tax regime, the tax rate structure is proposed to be revised, as follows:
Comprehensive review of Income Tax Act, 1961
— Finance Minister Nirmala Sitharaman announced comprehensive review of Income Tax Act, 1961. The purpose is to make the Act concise, lucid, easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the tax payers. It is proposed to be completed in six months.
— A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions and capital gains taxation.
Angel Tax Abolished
— Union Minister Nirmala Sitharaman announces the abolishment of angel tax on investors in India, in a bid to boost startups.
— While the angel tax was first introduced in 2012 to deter the generation and use of unaccounted money through the subscription of shares of a closely held company at a value that is higher than the fair market value of the firm’s shares, its scope was widened even to non-resident investors from April 1, 2024 during last year’s Union Budget that saw strong opposition by startups.
Litigation and Appeals
— To dispose of the backlog of first appeals, the Government plan to deploy more officers to hear and decide such appeals, especially those with large tax effect.
— For resolution of certain income tax disputes pending in appeal, the government proposed Vivad Se Vishwas Scheme, 2024.
— To reduce litigation and provide certainty in international taxation, the Government will expand the scope of safe harbour rules and make them more attractive.
Deepening the tax base
For deepening the tax base Security Transactions Tax on futures and options of securities is proposed to be increased to 0.02 per cent and 0.1 per cent respectively.
Other major proposals
- Withdrawal of equalization levy of 2 per cent;
- Expansion of tax benefits to certain funds and entities in IFSCs
- Immunity from penalty and prosecution to benamidar on full and true disclosure so as to improve conviction under the Benami Transactions (Prohibition) Act, 1988.
- Changes in custom duty.
- Simplification and Rationalisation of Capital Gains
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