Budget 2024: A Blueprint for Long-Term Growth

Context:

In a crucial move to bolster India’s economic strength, the Union Budget for the fiscal year 2024-25 has taken major steps to ensure the continuity of progressive reforms. There is excitement in the MSME, E-commerce, and start-up sectors, which have received additional support as the nation advances toward the goal of a Viksit Bharat.

Relevance:

• Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment
• Inclusive Growth and issues arising from it
• Government Budgeting

Mains Question:

The Union Budget 2024-25 reaffirms the Govt’s dedication to long-term growth. Discuss in the context of initiatives proposed in various sectors. (15 Marks, 250 Words).

A Boost for MSMEs:

• The budget appropriately supports the lower end of the industrial spectrum by providing essential credit access for the MSME sector. India is home to 633.9 lakh MSMEs, with over 99% classified as micro-enterprises, totaling 630.5 lakh.
• One significant barrier preventing micro-enterprises (with investments up to INR 10 million) from growing into small or medium enterprises is the lack of access to formal credit.
• By doubling the MUDRA loan amounts and establishing new SIDBI branches, credit will become more readily available to these businesses.
• Other measures, such as the mandatory Trade Receivables Discounting System, have improved liquidity, while industrial parks will offer digital support that MSMEs typically cannot afford.
• Additionally, the new credit guarantee scheme for MSMEs provides term loans without collateral or third-party guarantees, significantly reducing the financial strain on small business owners and encouraging entrepreneurship.
• This positive support for this vital sector is likely to boost its confidence, allowing it to move beyond its risk-averse nature and pursue ambitious growth toward 2047.

Skilling and Job Creation:

• The government has addressed the need for job opportunities and skill development for the youth with this budget.
• The continued focus on skilling will enable training institutions and large corporations to help create a pool of professionally trained workers who can be easily absorbed by them and the broader MSME ecosystem, which often lacks funds for training.
• However, careful implementation will be crucial to moving in the right direction of job creation.
• By ensuring effective execution, the government can pave the way for generating employment opportunities and equipping the youth with the necessary skills to thrive in a competitive job market.

Rural Economy:

• The rural economy continues to benefit from government support, as bolstering this sector is vital for the country’s long-term economic growth.
• The 2024 budget introduced significant initiatives aimed at increasing productivity and ensuring food security in grains and oilseeds.
• These efforts are expected to foster new economic clusters, promoting sustainable growth.
• A notable aspect of the budget is the plan to train 1 crore farmers in natural farming, marketing, certification, and branding, providing a substantial boost to organic farming.
• This focus on mitigating the impact of climate change on agriculture demonstrates the government’s commitment to building resilience in the ecosystem and ensuring the sustainability of the rural economy.

Start-ups and E-Commerce:

• The start-up ecosystem across India has welcomed the abolition of the angel tax, as proposed in the budget.
• The angel tax, introduced in 2012, was levied on the capital raised by unlisted companies through issuing shares to Indian investors if the share price exceeded the company’s fair market value (FMV). This change is expected to encourage more investment in start-ups.
• Additionally, traders and artisans using e-commerce platforms received a boost with the reduction of TDS and the decriminalization of TDS delays.
• E-commerce exports, currently at $2 billion, are projected to reach $350 billion by 2030. With revised custom duties, the government aims to support artisans and traders who sell their products online, aligning with its Make in India strategy and promoting the growth of the digital economy.

Energy Security:

• India’s rapidly growing economy requires increasing energy resources. The budget aims to achieve energy security by encouraging private investment in small nuclear energy reactors and promoting R&D into newer nuclear energy forms.
• These measures are designed to meet India’s rising energy demands while advancing its energy independence goals.
• Regular energy audits in clusters, larger commercial thermal plants, and a pumped storage policy are part of the budget’s strategy to help India manage its growing energy needs effectively.
• However, while the country’s green economy targets are ambitious, more efforts are necessary to ensure a successful transition to sustainable fuels.

Digitization of Land Records:

• One of the most significant initiatives in the budget is the digitization of land records, which could have a profound impact on India’s economic growth.
• Many land areas, particularly in rural regions, are entangled in disputes due to a lack of proper documentation. This issue poses a significant barrier to land acquisition for major projects.
• By digitizing these records nationwide, the government aims to eliminate middlemen and reduce the number of land-related legal cases, thereby streamlining land transactions and supporting economic development.
• Overall, the Union Budget 2024-25 reaffirms the government’s dedication to sustained long-term growth.
• Through strategic investments and forward-thinking policies, India is well-positioned to navigate global challenges while leveraging its vast potential for socio-economic progress.

Conclusion:

The Budget contains measures to empower the poor, women, youth, and farmers. The initiatives introduced in this budget are timely and poised to elevate the Indian economy to new heights during the Amrit Kaal, increasing its resilience in an ever-changing global environment. The journey toward a Viksit Bharat may present challenges, especially given global dynamics, but with a consistent vision and progressive policy support, the dream of a developed India is within reach.