Union Budget 2024 Explained: Key Highlights and Implications

Why in news?

The Union Budget was tabled in Parliament by Union Finance Minister Smt. Nirmala Sitharaman and details the government’s financial plan for the next fiscal. This comprehensive overview aims to simplify the budget’s key points.

What is the Union Budget?

• The Union Budget or the Annual Financial Statement is one of the most influential economic documents in India.
• The Union Budget prepared and presented to the Parliament also known as the Annual Financial Statement reveals the financial position of the central government.
• This lays down the government’s total receipts, otherwise known as revenue generation plan and total expenditure plan of different ministries and departments.
• Another significant term that can be linked to the budget is a fiscal deficit proposing the difference between the government spending and its income, usually covered through credit.

How is the Budget Relevant?

• Union Budget again directly affects the life of the common man of the country as this lets the common man know how the government intends to utilize the common man’s direct and indirect taxes they have paid.
• It shows the government’s focus in terms of collection of revenue and spending that may influence economical stability, personal budget, and the collective development of a country.

Major Highlights in Union Budget 2024

Operations to Help Politically Relevant States

The state, Andhra Pradesh, will get Rs 15,000 crore for the development of capital city Amravati, pointing to the Centre’s priorities on regional development of key ruled states.

Increasing the Long Term Capital Gains Tax

To increase the revenues, the government has proposed to increase the Long Term Capital Gains tax from 10% to 12%. 5%. This is due to increase in equity investments and profit taking by investors that has shifted its operation, He stated. The Economic Survey published for the year 2023-24 gave an indication to this change stating that higher equity market claims are often indicative of a destabilised market rather than a robust market.

Support for MSMEs

Understanding the problem faced by MSMEs, H2 system to explain the measures for further credit of stressed MSMEs declared by government. This sector constitutes nearly 30% of the country’s Gross Domestic Product, 48% of the total export and has a workforce strength of more than 110 million.

Tribal Community Schemes

• The budget intended programs for tribal welfare, which were the Pradhan Mantri Janjati Unnat Gram Abhiyan that seeks to enhance the environment of dwelling places of majority tribal families and aspirational districts.
• It is proposed to cover 63 thousand villages under this scheme for which five crore tribals will be benefited.
• E-Government, Issues, and Challenges in the Management of Urban Land Records
• Interestingly, for urban growth plans, it unveiled the integrated package for digitising the urban land records using GIS and computerised records of properties.
• This endeavor is expected to increase own source revenues and thereby the efficiency in collection of property taxes for ULSs’ to augment their own resources.

Changes in Income Tax

In order to bring some relief to the taxpayers the proposed amendments now include the increase of standard deduction from 50000 to 75000 and the increment of deduction allowed for family pensions from 15000 to 25000. Also, changes in the income tax slabs under new tax regime may provide additional tax relief of up to Rs 17,500 per year to the tax payers.

Climate Finance Taxonomy

The government shall thus create a ‘classification’ scheme on climate finance with a view of improving financial resources available for climate change adaptation and/or climate change mitigation. The above framework will subdivide economic activities into sustainable and non-sustainable ones, thus directing climate finance to sustainable undertakings in line with India’s climate plans.

Space Economy Boost

Venture capital fund of Rs 1,000 crore has been unveiled to kick start space economy, and here is an aspiration to increase it five times in the next decade. The sector was opened to private players early last year and this is the first time the government is offering financial support to the sector.

Customs Duty Adjustments

To encourage the manufacturing of jewelry of gold and precious metals in the domestic industry the following changes have been made: The essential customs duty on gold and silver has been lowered to 6% and on platinum also 6%. 4%. These adjustments are some of the ways that have been made in order to improve the competitiveness of participating jewelers from India.

Housing and Urban Development

The budget unveiled a new universal scheme under which an expenditure of Rs 10 lakh crore will be made for the construction of one crore houses under PMAY (Urban) 2. 0. This includes Rs 2. In cheapest rate it is aimed to provide 20 lakh houses for urban housing necessities in 5 years with central assistance of 2 lakh crore.

Sector Vision and Strategy for the Financial Sector

To cater for the future challenges Nature, the Financial Sector Vision and Strategy Document that will be rolled out will be new. This document will be of relevance to the government, regulators, financial institutions and the rest of the market players within the next five years.

Tourism Development in Bihar

The Bihar state was the largest beneficiary of the assigned amount of money in respect of tourism as major portion went to Vishnupad temple at Gaya and Mahabodhi temple at Bodhgaya. Rajgir and Nalanda will also be made focal points of tourism to boost the tourists’ interest in the state.

Small Modular Nuclear Reactors and Energy Storage

Licensing and Regulatory Requirement of Small Modular Nuclear Reactors and Energy Storage Research programmes on SMRs and AUSC thermal power plant have been provided with funds for cooperation. Also, there is a plan to develop the policy on pumped hydro storage to manage the instabilities in the grid system.

Rural Connectivity

The fourth phase of the scheme ‘Pradhan Mantri Gram Sadak Yojana (PMGSY)’ was unveiled to provide all-weather road connectivity to 25,000 more habitations. Following the pattern set with previous initiatives, this one also aims to enhance the government’s efforts at developing the rural infrastructure and connectivity.

National Cooperation Policy

A new National Cooperation Policy will be launched to scientifically and legally establish the large-scale and orderly development of the cooperative sector. This policy seeks to super cede the current policy that has been in place for more than two decades and capture new challenges currently facing the cooperative movement.

Conclusion

Union Budget 2024 is laid out to seek political and macroeconomic stability and also directs attention to some of the major sectors including, MSMEs, cities, housing, climate, and space. Thus, including the revenues alongside the targeted expenditures, the proposed budget will support the development of the inclusive growth model and improve the financial conditions of the country.

FAQs

Q1: What is the Union Budget?
Ans: The Union Budget, also known as the Annual Financial Statement, outlines the government’s financial plan for the upcoming fiscal year, including revenue generation and expenditure allocations across various sectors.

Q2: Why is the Union Budget important?
Ans: The Budget directly impacts citizens by determining how public funds collected through taxes are utilized. It highlights the government’s taxation and spending priorities, influencing economic stability and individual financial planning.

Q3: What are the changes in income tax?
Ans: The standard deduction has been increased from Rs 50,000 to Rs 75,000, and the deduction on family pensions from Rs 15,000 to Rs 25,000. Revised tax slabs under the new regime could provide taxpayers a net gain of Rs 17,500 annually.