India Inc has welcomed 2024 Union Budget’s focus on continued infrastructure push, tax cuts and rationalisation, increased focus on rural spending, sharp focus on generating more employment and skilling initiatives, while also incentivising domestic manufacturing.
On July 23, Finance Minister Nirmala Sitharaman stayed the course on the government’s infra capex target of Rs 11.11 trillion announced in the interim budget in February. The Finance Minister announced a slew of measures to boost rural economy and consumption, including a provision of Rs 2.66 lakh crore for rural development, and changes to income tax slabs for the new tax regime that will help the common man save up to Rs 17,500 in income tax. The FM also increased the standard deduction for salaried employees from Rs 50,000 to Rs 75,000.
The FM, however, did not lose focus on fiscal prudence, and targeted a fiscal deficit of 4.9 percent of the GDP for 2024-25, significantly lower than the target of 5.1 percent pegged in the interim Budget.
“Glad to see the Union budget's commitment to fiscal discipline and infrastructure development. A fiscal deficit of 4.9 percent, with a target of 4.5 percent next year, shows our economic prudence. Prioritising employment, skilling, MSMEs, and the middle class is crucial for building a strong, resilient economy,” said Sajjan Jindal, Chairman, JSW Group in a post on social media platform X.
Industry body ASSOCHAM President Sanjay Nayar added that this is a bold budget by the government, keeping in view longer-term fiscal prudence.
“With no easy giveaways, it focuses on a longer, more sustainable path of job creation through manufacturing in the country and a strengthened role of the MSMEs. Skilling the youth, formalising job creation, continuing infrastructure spending, and urban development, along with the climate of enhanced local capex spending, will encourage the private sector to join in, given under levered balance sheets. This is a longer, more sure way to enhance employment and sustainable consumption,” said Nayar.
He added the MSME segment was looking forward to further support, and the Budget rightly delivered, providing them with a fillip through several schemes like extending collateral-free credit for the purchase of machinery and asking public sector banks to develop in-house capacity for lending to MSMEs.
Notably, the full Union Budget 2024 incorporated several measures to boost the MSME sector, such as credit guarantee scheme for MSMEs in manufacturing, a new credit assessment model to be formulated by state-owned banks to assess MSMEs, credit Support to MSMEs during stress period, and SIDBI branches in MSME clusters.
The government’s efforts to boost consumption by leaving more cash in the hands of the middle class through tax cuts and large spending programmes to revive the rural economy were also appreciated by industry experts.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said that the association appreciates the government's focus on empowering the middle class and rural population.
He pointed out that initiatives such as monetary support for farmers, higher exemption limits in personal income tax, and increased standard deductions will provide higher disposable income, leading to increased spending.
“We believe this will stimulate consumption growth, thereby boosting the overall economy. The reduction of duty on gold, precious metals, and mobile phones will also provide a significant boost to these sectors, particularly during the festive season,” said Rajagopalan.
Even the startup sector hailed the budget. "The government's comprehensive approach to inclusive development, with a substantial Rs 3 lakh crore allocation for women-centric initiatives, is a significant step forward. By empowering women, youth, and marginalised communities through schemes like PM VIKAS and the Lakhpati Didi Scheme, we're not just fostering individual growth but building a foundation for a more robust and inclusive economy," said Richa Singh, co-founder and CEO YourDOST.
"These initiatives represent a crucial step towards harnessing India's full human potential and driving sustainable socio-economic progress," she added.
Skilling initiatives announced in the Budget are also seen as important moves from a long-term perspective for improving employment opportunities for the youth.
“The Budget announcement has laid a strong foundation for advancing education, skilling, and employment opportunities and is truly commendable. The allocation of Rs 2 lakh crore for the five employment and skilling schemes, along with Rs 1.48 lakh crore for education, employment, and skilling, underscores the government's dedication to the country’s youth and its commitment to propel growth. The new centrally sponsored scheme aimed at skilling 20 lakh youth over five years will significantly contribute to fostering a skilled workforce,” said Pankaj Jathar, CEO of NIIT Ltd.
He added that these steps are the need of the hour to bridge the gap between education and the skills essential to equip the youth to be industry-ready. “These initiatives will help us maximize our education and skilling efforts, propelling the next phase of growth for the Indian economy.”
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